Management by Objectives - Case Study Example

EUROBANK Case Study Introduction: The truly Transnational or Multinational corporations are organizations that have incorporated both national and global functions and perspectives. Corporate cultures are tailored and acquired; it is mutually dependent on shared meanings of cultural symbols of different nationalities, their priorities, shared values and norms, both explicit and implicit. Back ground: In the cited study described here, Eurobank prima-facie seems to have a relatively open culture setup; it is supposedly adoptive to all types of cultures, since it is operating in 80 countries worldwide. Although aspiring to be called an international bank, its home based in France does give Eurobank a somewhat influenced culture and therefore a national expression. Interesting enough, Eurobank has an ill defined corporate culture which is essentially different from a purely national culture, yet its corporate culture is an overt expression of French national values and traits. This may be attributed to presence of the French upper management and corporate policies and dual official languages on one hand while its English locale and the hundreds of local English employees not expatriates on the other hand. 1. Relationship between the corporate and national culture and more particularly the impact that the national culture has on the corporate culture of Eurobank. Although the General Manager of the bank describes Eurobank as largely transnational, but down the line other managers have taken a rather different outlook. It has been labelled as a national bank but with successful footholds and ventures overseas its international stance cannot be overlooked, perhaps amalgamating through acquisitions as an international bank. Nevertheless in true essence Eurobank in England is not given the recognition of a global organization by some quarters. Though much is being done to remove the traces of national culture and give it an international visage with a high degree of autonomy and hiring of mostly English staff, still we are able to detect the distinct national cultural characteristics influencing their corporate culture. It is the Eurobank policies and functioning style that remain normative to both national and corporate cultures. Preserving its national culture has its merits too, for e.g. as we can see with its broad customer base and customer loyalty agenda. Its national identity does hold importance to its customer groups and that is the reason they seem to have inducted that into their business strategies. The idea behind such a blend is that customers tend to correlate and recognize the culture of the institution that they are entrusting with their assets. Although the increasingly European cultural styles strategies for competitiveness in customer services may be a good strategy but it may be viewed with biasness over the times. To support the idea that Eurobank is a multinational bank we can notice that a number of measures are being taken to this end e.g. the meetings are done in both French and English as official languages, importance is given to local cultural awareness and understanding during organizational training programmes, and overseas postings are very much common. Understanding of the global corporate practices and changing or adapting to changes for instilling the same cultural style is essential to corporation’s recognition in the international arena. Understanding the phenomenon of the connection between the national culture and the corporate culture can be very complex, yet the national cultural influences which create unhealthy and undermining concerns have to be recognised and effectively neutralize. 2. Various issues that have obstructed the cultural management across national boundaries and caused friction in Eurobank: The following points highlight the issues that have prevailed in obstruction of cultural management in Eurobank: A “distinctively European corporate culture” within the Corporation: In this particular London branch of Eurobank, the French national cultural signs predominate and are value based lacking in practicality to some extent as is customary in all such cases. On the contrary if it had a predominant multinational corporate culture it would have harboured best practices and concerned less in values. for e.g. we can see in the case study here referring to it as a “French tendency towards centralism”, the Eurobank sticks on to its very French human resource management styles. Where the Eurobank has about 1800 mostly English employees, in its London branch, the General Manager and the three top management people are French that automatically leaves doubts about the organizational culture to be dominated by the French. Then there are the unorthodox team working definitions which commonly refer to teams as groups of individuals working in the same area or doing the same tasks rather than strategically combined mutually dependent groups working towards common organisational objectives. Evidence research: Due to acquisitions many multinational companies tend to adopt a policy that respects local cultures of the countries of operation. With their policy of hiring very few expats, these companies have given growth to locally hired recruits, and that has given them the distinction of being a multinational company with a local label and not a national one. (Schenieder Electric-aggressive French giants, January 2006) Lack of Mission and Core Values Statement: Due to lack of a laid down mission statement and core values the employees lack a clear understanding of the corporation’s goals and objectives in an illustrious sense. Although the staff has a high level of awareness of the organizational aims, which are being published widely, the customary practice of having written statements doesn’t give it a multinational cultural norm. Although the practical approach to achieving goals are more important but laid down principles have a very important place in an organizational culture. Ambiguity in understanding the True Eurobank culture by Staff: The understanding of the corporate culture is different at different levels of management. At the top level it is taken as open and broad with full liberty to take initiatives by the front line managers and decision making for achieving objectives. They are accustomed to group discussions, brain storming, supportive actions and understanding the people needs. Whereas down the line the cultural scenario is taken more conservatively, with low motivational levels and a narrowed down outlook. The managers below the top tend to show casualness in decision making and taking initiatives because they feel restrained. There is a lack of tendency to change and with their pessimistic approach that they have, the lower staff generally tends to follow the typical procrastination pattern of a typical French staff. Research Evidence: French are a nation more prone to lengthy debates, arguments, discuss issues and go at length to highlight problems but typically do not embark on to solving them instantly, therefore the importance of a culture that deliberates vividly and communicates solutions without more ado, would simplify a lot of issues and save time. Deficient Hire and Fire Policy Although the employee loyalty and long service recognitions are supportive from an employees perspective yet it should not compromise the employee performance. The Bank has a ‘no fire’ policy due to its French mindset. This is leading the Bank towards a bureaucratic culture. Since there is no threat of losing job people have a casual attitude towards their job performance and have a laidback attitude. Thus the organization is nurturing the low-achievers who sit back and expect to take orders form their superiors instead of being innovative and taking initiative to perform at the highest of levels. Personal policies in the human resource department have to be improvised to delegate the expectations of the organization for positive contributions. All in all people need to be made more accountable, more adopted to bring in changes in their outlook as well as organisational work culture towards more globally recognised forms. They need to be appraised regularly for performance reviews, in order to retain and reward high achievers and fire those who are not beneficial to the bank. The company has begun to review its recruitment and selection policies and procedures, to counter this effect. This is going to help them sieve out the people who are risk takers and innovators who like to perform at the highest of levels. They are alluring the people from competitive sectors who are more aligned to their corporate culture, and come from a totally different background. Research Evidence: Success of the organization is largely dependant upon strict criteria for hiring because only if the employees perform well the organisation will grow. At the time of hiring only any possibility that one may eventually have to fire the person should not be entertained, there should be no test runs.(Mike Holt 2002) The Directive Style of management The Eurobank Mangers specially from the lower cadres are more used to the “being dictated” mode of working although they are being trained and encouraged to adopt the leadership style, which is a supportive way of management. Nevertheless they have been lacking in taking initiatives and making decisions, and with the prevailing directive style the lower down managers have become used to the top down approach. This is seen as a threat to growth and performance of the organization by the English managers, who have reason to believe that with the relaxed approach and casualness in delivery, will hamper their efforts in building a dynamic organisation. Research Evidence: In support of this reference is being made to compare between the two types of employees in a corporate culture; the procedure oriented versus outcome oriented, the people of the type are being referred to as those avoiding risks and not undertaking initiatives, whereas the outcome oriented is at home in all situations, the one who is ready to embrace challenges. (Hofstead, 1997) Lack of “Management by Objectives”: The Eurobank is seriously lacking in aligning individual employees personal objectives towards attainment of a common organizational goal. In order to establish this,” management by objectives” environment the organization needs to seriously motivate employees to draw personal objectives , take initiatives, make decisions and perform as contributors towards a common corporate goal and exercise self-governing attitudes in the routine management of their teams. Research Evidence: The MBO system is an structured way to streamlines individual goals, of their human resource into a common organizational goal, and has proven to work strongly towards achieving organisational goals.(concept: Peter Drucker Training and recruitment and reward policies: The serious lacunas in training and human development over the time have evolved into a somewhat moribund European corporate culture. There seems to be a relatively low understanding of; the international norms of a charged multinational culture, transition into learning organisations and the need to an attitude change within an interventional and high performance culture. This is where the greater chunk of the staff mostly lower down managers tend to suffer and become more unenthusiastic. The lack of a more enabling and higher trust environ and empowered working conditions has perhaps done a lot of damage to the banks corporate culture. Formal Appraisals: The French corporate culture doesn’t have room for candid employee performance appraisals. The concept of evaluation on the basis of competency and comparative criteria are alien to the French culture and regarded with despise. The French Managers are not accustomed to criticism and frank corrective advices to their subordinates, and vice versa the subordinate is not going to challenge the managers actions at any step. Even if they do not want to or unwilling to do a task assigned to them they wouldn’t raise any questions or show unwillingness on face of manager, rather pretend that they are going to do it, whereas in fact they wouldn’t. This automatically will not affect their appraisement, for the manager is most unlikely to criticise or ask them about the job not having been done. This very reason is enough to discourage the formal appraisal systems given in written, to which the English are more used to. The performance review thus becomes a big question mark at the end of the day in this national cultural influence, which doesn’t allow any form of formal evaluation and performance determination. But this can result in a non compliant workforce and decreased employee performance output. Resistance is bound to be experienced when changes that Eurobank seeks to adopt, due to the obvious differences in the corporate and national cultures (to which the Eurobank employees have got used to). Research Evidence: Appraisals are the windows to employees performance and tools for ascertaining their role in the overall organizational objectives. It is the key to human resource management. These evaluations serve to improve employee performance as well as ensure organizational goal attainment measures. With the help of the appraisals employees are made to understand the gaps in a person’s performance, the level of his attainment on the accomplishments index., and evaluates his or her performance in a given time frame against organizational criteria’s and standards. (John Ball 03 My 2006) 3. Communication Problems in Eurobank case study In the case study communication problem can be diagnosed in many forms: French Language and Flavour: Firstly Eurobank being a French bank, has a policy of stationing French employees for the position of General Manager and other senior positions, secondly all meetings are conducted in two official languages of the bank; French and English, these give room to problems in communications. The predilection to have a “predominant culture” on top of a conventional culture may undermine communication between the upper management and lower down. This is a general observation that people are very sensitive to language issues and feel comfortable in a mono-linguistic environment. During day to day working and particularly during meetings when the staff convenes a dual language environment is bound to make the symbols of communication imperfect and the messages of the sender not reach the receiver as accurately as desired especially on critical issues. In most multinational organizations the culture is usually much diversified and generally one official language policy is adopted in order to resolve communication barriers. This is specially problematic when the top managers who in this case are mostly French have to delegate authority to their lower managers in a language that is not their own. Research Evidence: Communicating effectively and making decisions timely is the need of the hour, and works to build up manager and subordinate relationship very effectively. Getting things done is the prime responsibility of a manager and through proper communications and delegation of authority for doing tasks needs properly communicating. (Stephen Thomson, 1997) Missing Mission Statements: The bank does not have a formal mission statement, very typical of a French corporate style. They have reason to believe that actions rather than words govern organizational objectives, yet the importance of written words should not be neglected. A written and clearly specified mission statement serves to communicate the outline of “management by objectives”, principles. The employees can always refer to the mission statement as a golden guideline to follow for ambitious undertakings and formation of symbolic models of customer oriented practices which are very important to the banks growth. Although their aims are published amongst staff but the customers also need to know what Euro bank values most. This would entail a customer trust building, perfectly structured, easy to understand, corporate mission statement. Vision and Values: Similarly value statement, which defines the key strategy and vision of the company, is missing here, both on the pretext that the reliance on words should be replaced with actions. This is obviously seen as a good policy by many managers there, who regard the mission and value statements only for their cosmetic value. Nevertheless all this is causing communication gap. The reference to the corporate culture being viewed differently at different levels depicts this very candidly, which is to some extent not favourable for a good corporate culture. This is the reason why terms of reference, corporate vision and core values etc. should not only be in black and white, but also inducted into policies and standard operating procedures ( SOPs) to let the employees, know the scope of their work, and jurisdiction of their authority and liberty to take initiatives. Unclear HR Policies: There seems to be a lack of understanding of the HR policies among the senior staff, which may again be attributed to lack of communication and proper delegation. The organization perhaps should be very objectively communicating to the employees the empowerment phenomenon and distinctly letting them know that they encourage supportive style of management rather than the directive style of management. The communication gap doesn’t give them the autonomy on distribution of rewards and appraisal system in management of performance within their departments. Lack of Delegation and teamwork: Due to lack of constant delegation and proper training programs for communicating successful corporate practices, the French predilection of team work which seeks to enhance individuals working in the same area or for the same tasks rather than mutually dependent groups working in cooperation, can seriously hamper overall organizational objectives attainment. The inaccessibility of the managers: and lack of persistent communication leading to failure of information sharing with their teams greatly hampers the confidence building measures, pretences, insincerities and intriguing non-compliance which sets in an organizational culture as dysfunctional behaviour and can prove to be the greatest cultural barrier. Research evidence: the negative signs of behavioural resistance can be very damaging and to name among the few insincerity and hypocrisy. (Senn-Delaney Leadership Consulting Group, 2003) Works Cited 1. Hofstede, G. (1997). Culture and organizations: Software of the mind. New York: McGraw-Hill. (internet)Available from, http://www.tamu.edu/classes/cosc/choudhury/mnc.htm 2. Stephen Thomson (2007) Importance of communications in an organization (internet) available from Ezine Articles. http://ezinearticles.com/?Importance-of-Communication-in-an-Organization&id=423299 Article Submitted On: January 19, 2007 3. Jim Pinto, San Diego, CA. USA, Schneider Electric – Aggressive French Giant (Internet). Available from, http://www.jimpinto.com/writings/schneider.html This article was published by: Automation.com, January 2006 4. Senn-Delaney Leadership Consulting Group, LLC. (2003) Changing the Corporate Culture. (Internet) Available from: http://www.beyondlean.com/corporate-culture.html 5. John Ball (03 May 2006).Understanding the importance of appraisals (Internet). Available from, http://www.accademy.com/students/study_exams/qualifications/acca_choose/acca/fundamentals/ab/technical_articles/2945138 6. Concept by Peter Drucker. Executive Summary by Vadim Kotelnikov, Founder, Ten3 BUSINESS e-COACH, 1000ventures.com(version 2008) Management by Objectives, (Internet) Available from, http://www.1000ventures.com/business_guide/mgmt_mbo_main.html 7. Mike Holt, (2002) Hiring and Firing, Business Management and Management Skills’ Workbook.(Internet) Available at, http://www.mikeholt.com/mojonewsarchive/BM-HTML/HTML/Business_Management_-_Newsletter_81~20030401.htm Read More