by Patrick Haighton of P H I Associates

Changing the culture and strategic direction of a large and complex organization - in this case an international bank - requires clear vision, leadership championship and coordinated direction of many elements sustained over a long period of time.

The Bank is established in some 60 countries and in the late ‘80s was performing so poorly that its survival was at stake. The regulators forced the appointment of one its own deputy-directors as Chairman/CEO to take charge and turn it around.

The organization was rigid, hierarchical and formal - a relic of a colonial past. The country managers were independent barons. The corporate office was bloated and out of touch with the businesses. Management processes were bureaucratic and poor. Controls - both for management and of risk - were out-of-date, rudimentary and unsafe. The group lacked leadership and direction. Many significant issues had not been addressed and needed urgent attention.

A review team spent 9 months in all parts of the group in preparation before the board approved a strategic plan to turn performance around, remove significant 'icebergs' which could sink the bank, and change the culture to a dynamic, competitive business orientation.

During this time the theme 'Breakout' (how best to break out of the declining performance spiral, or face break up and selling the parts for more than the market value of the whole), and the 'benefits of a creative participative organization', were the subjects of seminars, workshops and communications to build the required mutual commitment and energy for change throughout senior management ranks.

In five years from the start the bank pursued these strategies - leadership and management was on a new plane of competence, direction was constantly reinforced in public statements and advertising, performance was transformed, the stock price multiplied 9 times, the structure now combines global and local responsibilities, business is much more focused on core products and markets.

Implementation of the required changes was not always a smooth progression. For the first year progress was very slow and patchy, held back by trepidation of the executive champions charged with driving it. The pace gradually accelerated as confidence grew and new leaders - from the Board on down, were introduced.

The first steps to improve performance and co-ordinate direction involved each business and function leader presenting his strategies and plans to the executive committee and the board for full discussion. Gradually these improved in quality and started to fit together, and enhanced the overall aspirations of the group.

First steps to develop the new culture were introduced by successive waves down through the structure, by workshops and formal training, and by constant attention and coaching of management style and behavior, at several levels:

• the board and the executive committee [monthly]
• the top 50 managers [quarterly international management meetings]
• the next 300 managers [Focus 300 seminars]
• the next 2000 [Focus 2000 training program]
• and on by newsletters & videos, and by example

About 100 of the Focus 300 senior managers became Change Agents with specific individual responsibilities to carry new culture development across the whole organization. As a group the Change Agents drove the Focus 2000 training program. All this took more than three years. (A criticism, in retrospect, is that the competencies, skills and performance of individual managers were in such a broad range that more pre-selection and pruning should have been carried out earlier.)

Global responsibilities were introduced to internationalize and co-ordinate key market segments (e.g. trade finance and treasury, private banking and custodial services). The corporate office was downsized in head count (and upscaled in skills) to concentrate on portfolio management and policy, regional offices were strengthened to concentrate on trans-national business (e.g. in Asia-Pacific and Africa), to concentrate service functions, and standardize country by country offerings.

Implementation projects were coordinated and monitored from the Chairman/CEO's office in a Development and Planning function, and covered all aspects of change management: - communications, redesign of structures and processes, training in key competencies, re-deployment of skills, planning and project management - , and investment projects: - initiating new businesses, selling off or closing non-core activities, joint venture and acquisition activities, as well as fighting off a takeover attempt.

After about five years, though probably not earlier, it became fair to believe that fundamental change in style and substance had become irreversible, and that the foundation for future growth was stable and sound. In the years since this has proved correct and the Bank has grown and prospered.