Lloyds TSB & HBOS: A Comparative Analysis of Organisational Culture - Case Study Example

Running head: Lloyds TSB & HBOS: A Comparative Analysis of Organisational Culture Lloyds TSB & HBOS: A Comparative Analysis of Organisational Culture [Writer's Name] [Institution's Name] Table of Contents 1. Question no. 1------------------------------------------------------------------ 02 2. Question no. 2------------------------------------------------------------------ 03 3. Question no. 3------------------------------------------------------------------ 05 4. Question no. 4------------------------------------------------------------------ 08 1. What contribution of culture in the apparent success of each organisation The Organizational culture is a set of broad guidelines which are entrenched in organizational practices at the workplace learned. Organisational culture management is a complex and time consuming job. Organizational culture is the key to organizational excellence... and the function of leadership is the creation and management of culture..." Edgar Schein Organizational Culture and Leadership. In Lloyds TSB, the organisational culture revolves around the creation of value for shareholders, managing for value and measuring the value. In order to better understand the culture of both the organisations we will analyse the cultures of both the organisations according to the five attributes used by Hofstede in a study involving 160000 IBM managers across more than 60 countries. According to Hofstede five fundamental differences in national styles were found while examining the culture of the organisation. Power Distance The power distance in the Lloyds TSB seems to be lower as compare to HBOS where bosses are seen as more autocratic or paternalistic as compare to Lloyds TSB. The decision making at both the organisations is of consultative style. Again the employees at the Lloyds TSB are more participative and involved in the operations and decision making of the organisation as compare to HBOS (Higgs, 1996). Individualism Individualism is prevalent in the British culture as a result both the organisations have the culture of organising the work in such a way that the self interest of employees is aligned with the management of the organisation (Huczynski & Buchanan, 2007). Uncertainty avoidance As described by Hofstede (1997, p. 120) described uncertainty avoiding societies are a society where there are many formal laws and informal rules controlling the rights and duties of employers and employees. At Llyods TSB the uncertainty avoidance is at low level therefore the organisation effectively implement teams with higher levels of autonomy. Whereas again at HBOS the employee empowerment is lower as compare to Lloyds TSB. Masculinity In both the organisations masculinity and Femininity traits are prevalent and can be experienced by undertaking an analysis of the behaviours of the managers. Hence the notion of learning by experience is not centric (Burden and Proctor, 2000). Confucian dynamism As mentioned by Hofstede there is higher acceptance of the legitimacy of hierarchy and the valuing of perseverance and thrift, all without undue emphasis on tradition and social obligations which could impede business initiative in the Western cultures. The organisational cultures of both the organisations verify the findings of Hofstede. 2. How would you describe the prevailing leadership styles employed by each organisation A leader has the qualities to influence others through his persuasive measures such as the communication, display of confidence, can gain information regarding the problem being addressed and persuade the masses in the desired direction (Prasad, 2006; p. 264). SOCIAL VALUES ECONOMIC CONDITIONS LEADER STRUCTURE FOLLOWERS POLITICAL CONSIDERATIONS [Source: Taken from, Prasad LM, (2006) Organizational Behaviour, Fig 26.1 p 287] All these factors interact together to determine the leader's ability to influence others. In HBOS the leaders of the organization practice a distinct participative style. The strong people skills in the leaders at HBOS enable them to fully understand the people and the situation from all aspects. The ability to address all the aspects provides them with enhanced persuasive ability. "It's hard to order and demand someone to be creative, perform as a team, solve complex problems, improve quality, and provide outstanding customer service. The style presents a happy medium between over controlling (micromanaging) and not being engaged and tends to be seen in organizations that must innovate to prosper." (Johansenn) Inclusive, Team-Oriented Approach Decision making is an important quality of the leadership which helps in the smooth working of an organisation. The leaders at Lloyds TSB practise an inclusive, team-building leadership style. The employees are given chances to state their point of view before a decision is made. It is also not necessary that the final decision is undertaken according to the initial perceptions of the leader. Being deep rooted in the people provide these leaders with the ability of reading the situations accurately as they are able to gather information from all sides and then make the most informed decision possible. The key of effectiveness of the leadership style is listening to the employee's stance. Only listening is not enough it is also important to implement a plan that incorporates the best of everyone's ideas. The leadership style is complimented by open communication with in the organisation. As stated by Susan Rice, CEO of Lloyds TSB Scotland. "To learn, you have to keep asking," says Rice, who says she is always asking questions. "The people I work with will say the process of me asking those questions helps to clarify their own thinking and they actually come out a little sharper that takes a lot of trust." The management in both the companies believe in defining a clear strategy, providing the open communication channels and encouraging managers to keep on learning and becoming experts in their fields. It is also important to share information regarding the decisions taken in the organisation. According to Pella's motivating and persuading employees is an important task which needs to be undertaken by the leader. "As a leader, I believe the biggest challenge is to make sure people are motivated, involved and contributing, because that diversity of thought is what brings value to an organization and helps make it successful." (Greenburg and Sweenay, 2005) 3. How have situational variables influenced leadership style Almost every aspect of work is influenced by, if not dependent on, leadership. The leader is the chief communicator to people outside the group as well as within the group (Mullins, 2004; 78). The leader's attitude and behaviours affects the motivation of the group. The leader is responsible for seeing that the group's objectives are clearly understood and are accomplished. The planning and control mechanisms are designed or modified by the leader. How the leader behaves influences employees' satisfaction and affects the quality and quantity of output. All leaders have three limiting factors to contend with. Firstly, they are limited by their own ability, by their knowledge, skills, attitudes, weaknesses and inadequacies. Secondly, they are limited by the level of experience, skills, proficiencies and attitudes of their subordinates. Finally, they are limited by their environment. This includes the resources and conditions, which are available to them in their effort to achieve their objectives. All these factors are constantly changing (Yvonne, 2003, p. 189). Leadership is a vital and dynamic function in organizations. The quality of leadership is a key factor in the accomplishment of the organization's objectives. It is generally recognized that certain types of leaders suit certain situations better than others. For example, some leaders perform better in a prosperous, or growth, period, others in an austere or contracting period. According to the situational leadership theory the leadership should be flexible enough in order to find out the appropriate leadership style according to the situation posed to the organisation. Adopted from Situational Leadership available at www.ais.msstate.edu/AEE/3803/ppt/13-situational.ppt At Lloyd's TSB the leadership is change adoptive while sticking to the core values and aims of the organization. The process of change management is undertaken in order to eke the core strategic aims of the organization (Rollinson, 2005; p.89). The company implemented a change management tool in order to assist project management and governance. The target users to be connected to the system will be 3,000 (King, 2008). The Fielder's contingency theory was used in order undertake the implementation of the system and designing the supportive culture. Leadership style and situational control was achieved through changing the individual's situational control in order to lead the performance of the employees in desired direction. Adopted from Situational Leadership available at www.ais.msstate.edu/AEE/3803/ppt/13-situational.ppt Hersey and Blanchard's Situational Leadership: The leaders at HBOS practise the follower development style according to the level of willingness to perform different tasks according to their competence and motivation. The leaders in the organisation seem to adopt different leadership styles according to the requirements of the situation. According to the Hersey and Blanchard's situational leadership theory there are four leadership styles. "The four styles suggest that leaders should put greater or less focus on the task in question and/or the relationship between the leader and the follower, depending on the development level of the follower." (Minds.org) 4. What are the challenges facing each organisation in order to make a success of the merger Most of the organizations do not pay attention to the fact that while the merger is taking place between two or more companies the fundamental personal and organizational values are also affected. It is important to carefully design the corporate culture change efforts. The employees can be motivated to be adaptive to the processes and priorities of the leadership of the organisation, or the leaders of the organization can set exemplar behaviours of leaders to be followed by the employees. These values and leadership traits need to be aligned with the deeply held national cultural values of employees or in the other case the processes to incorporate these values will be adversely effected. It is not necessary that the values of a culture can be adjusted with values of other culture. The solution is not to abandon "the efforts to unify organizations after a merger or cancelling efforts to build high performance culture, but in overlaying and harmonizing local interpretations of corporate practices to cultural norms" (ITAP International, 2009). In case of the merger between the Lloyds TSB and HBOS the Lloyds is the dominant partner in the merger with respect to the greater number of employees and market value. The core rationale of the merger was to save HBOS from another Northern Rock-style collapse and nationalization. The bank is taken overbyLloyds TSB for 12 billionamidst a stock price crash of 66% in three days (shaliniamarnani.com, 2008). It also saw the displacement of HBOS's rather conservative, cautious and traditional banking ethos by the more modern, competitive and market driven ethos of the Lloyd's TSB. Thus the merger was experienced by staff as an encounter between two different corporate cultures. As noted by different theorists the size and structure of the organisation also affect the culture of the organisation. The organisations with strong departmentalization do not tend to have a consistent culture across the organisation rather they have several cultures divided at department level. The departmentalisation culture is strong in Lloyds TSB; the culture of HBOS will get dissolved in the combination of different department level cultures. Although at the wider level "Lloyds TSB and HBOS have a very similar culture in terms of being very customer-oriented and having the same kind of values of transparency and openness. Both the organisations will have to unify on the notions of organisational culture. "Coping with merger almost required this. What is particularly striking however, and brought to the fore in this article, is the way distinctions made between the organisational cultures of HBOS and Lloyds TSB, are suffused with what the ideology of change. The merger is rationalised, often grudgingly, by reference to the more adaptive, change oriented culture of Lloyds TSB and HBOS" (Hearn, 2006). References Changing Minds.org, (2009). Hersey and Blanchard's Situational Leadership, available at http://changingminds.org/disciplines/leadership/styles/situational_leadership_hersey_blanchard.htm Greenberg, H., & Patrick S., (2005). How Women are redefining leadership Capiler, Retrieved as on April 15th, 2009 from www.caliperonline.com/womenstudy/Leaders6pg.pdf Hearn, J., (2006). National Identity, Organisational Culture and the Ideology of Change in Scotland, Draft paper presented at the BSA Annual Conference to the Scottish Study Group, 23 April, 2006, Harrogate, available at britsoc.co.uk/NR/rdonlyres/.../0/HearnBSA2006.doc Hofstede, G., (1994). Cultures and organisation; Intercultural Cooperation and its importance of survival; software of the mind. London, Harper and Collins. Huczynski A. A., & Buchanan D. A., (2007).Organizational Behaviour. 6th edition, HARLOW; FT Prentice Hall, pp. 78-80 ITAP International, (2009). Organizational Culture and National Culture: What's the Difference and why does it Matter Available at http://www.itapintl.com/whoweare/news/146-organizational-culture-and-national-culture-whats-the-difference- Mullins L., (2004). Management and organisational Behaviour, 7th edition, Pearson. Prasad LM., (2006). Organisational Behaviour. Educational publishers. Daryaganj. P. 271-295 Rollinson D., (2004). Organisational behaviour and analysis, an integrated approach, 3rd edition, Pearson shaliniamarnani.com, (2008). Take over of HBOS confirmed, Wednesday September 17, retrieved as on 14th April, 2009 from http://www.shaliniamarnani.com/cat=11 Starovic, D., Cooper, S., & Davis, M., (2004). Maximising Shareholder Value Achieving clarity in decision-making Technical Report, retrieved as on 15th April, 2009 from valuebasedmanagement.net/articles_cima_maximizing_shareholder_value Stuart, R., (2008). HBOS and Lloyds TSB: the implications for entrepreneurs, Thursday, 18th September 2008, retrieved as on April 14th, 2009 from http://www.realbusiness.co.uk/business-comment/page_2/5404686/hbos-and-lloyds-tsb-the-implications-for-entrepreneurs.thtml Yvonne McLaughlin. (2003).Business Management: A practical guide for managers, Supervisors & Administrators. Synergy Books International. P.186-215 Read More