Introduction. Some organizational behavior problems I would like to explore in this paper are management style, Job dissatisfaction, and organizational change and restructuring at National City Bank (based in Cleveland, Ohio) stemming from a recent change in its organizational culture. National City recently merged with PNC (Pittsburgh National Corporation) and with the merger came a change in the organizational culture at National City. Before the merger, National Citys strategy for acquiring deposit dollars was one of aggressive product pushing, without consideration for the consumer real anking needs.
Corporate pursued expansion efforts in new and existing markets by bearing down on frontline sales employees to literally force product on customers. Branch Sales Reps were required to sell a stated amount of products, and trained to lead customers to certain products by manipulating the conversations to the banks benefit. Customers ended up with products that neither met their banking needs nor added value to the existing banking relationship.
Amongst the consequences of such an organizational mindset were under-engaged transaction accounts, high account urnover, loss due to account abuse and fraud, loan default and ultimately, unfavorable customer perception. With the Pittsburgh national bank (PNC) takeover, an organizational attitude overhaul has seen a shift from the product-pushing selling approach to a more consultative, relationship focused sales interaction. This shift has required the re-training of National City legacy employees (These are National City employees, who have been employees before the merger and work in a non- overlapping market.
That is, a market where PNC did not do business yet) in echniques to broaden customer interaction to better understand the customer’s current and future goals and align them with products and services offered by the bank. In order for this mindset to be effective, sales goals are set in terms of total dollars raised instead of total widgets moved. The focus has become quality relationships. Problem. Overall, the new organizational culture should logically help correct the perception of National City by some of its unsatisfied customers since it would foster quality relationships between its customers and the bank.
However, the sudden change in ulture has met resistance from legacy employees who have been accustomed to doing their Jobs a certain way and that way only. This resistance has led to gross Job dissatisfaction among the banks legacy employees. In writing this paper, I have had to think through the issue at hand and draw inferences through analysis, while applying organizational behavior concepts as studied in class. In thinking through this situation at hand, it is important to trace back the true trigger of the mindset that the employees now hold.
Causal Analysis. With National Citys acquisitions comes a whole cultural change. A change that is felt nd other technicalities like account and product transitioning, but also affected by this change is the bank employees. When the announcement was made on December 2008 of the PNC merger, the general mood of the legacy employees was one of indifference, especially in non-overlapping markets like Chicago and Detroit. Legacy employees had no prior knowledge of either the merger or the prevailing culture of PNC.
National City intranet polls revealed that 78% of employees in Chicago have never heard of PNC before the merger, and 88% of National City customer in Detroit and Chicago combined had no idea of PNC as a financial orporation. By January 2009, the transition process had been broken into 4 (four) waves, with over-lapping markets like Cleveland and Pittsburgh, being the first to convert. National City employees in these markets had a little less time to adjust to the flood of change they were exposed to and their managers, who were also ill prepared, experienced enormous difficulties adjusting their expectations to align with the new culture.
Ideally, overlapping markets in a bank merger, experience the smoothest transition as mutual knowledge of each other’s style and approach already exists to a considerable level. The core of the organizational problem 00b dissatisfaction) currently experienced by legacy National City employees is in two folds. On one hand, the incompatibility of PNC deposit and loan products with National Citys products causes the new company to rename, and redraft customer account agreement for 34 million legacy National City customers (these are National City customers before the PNC merger).
New account agreements mean new PNC account specification, originally catered to meet the PNC target audience. This leads to the second half of the dilemma. The average revenue on a traditional checking eposit account for PNC is $1,250 and $230 for National City. PNC has consistently targeted the middle to upper, high-income individuals and as such, designed its product around this group of consumers. The typical PNC customer is an urban working professional, with decent to excellent money management skills and willingness to pay fees charged for banking services.
National City catered to a lower income and older, less affluent demographic and as such was more lenient towards fee refunds and low minimum balances in deposit accounts. Aside from reducing National City’s off balance sheet revenue, it attracted undesirable prospects with uestionable capacity to the bank. The stark difference in both companies target audience, means they each employed different sales approach, coached sales staff and measured performance by using also, very different metrics.
Now caught in between having to learn the nitty-gritty of new, more expensive products and acquiring skills necessary to sell to a more affluent audience, coupled with a revamped compensation and recognition measurement schedule (one in which managers are evaluated based on number of accounts sold and legacy employees, on number of revenue generating accounts they bring in ), legacy National City mployees are faced with the most difficult organizational change and not prepared to deal with it.
The frustration of dealing with this confluence of employee difficulties, clearly created by managerial decisions reached with little foresight is the main cause of the Job dissatisfaction that is now wide spread at National City. Employees exhibit negative attitudes to their Job tasks daily and constantly attribute their be an apparent disconnect between the lower ranked employees that do the daily work and top management or upper echelon, on issues that contribute deeply to the current situation of things.
Solution Suggestions: Alternative to the norm at National City now, some things could have been done differently to ease the difficulties now suffered by employees. 1. Modify the reward system: The current system of rewarding manager by number of accounts opened at their branches, but rewarding legacy employees by number of revenue generating accounts they are able to secure, is unfair.
This has caused managers to aggressively push employees to secure Just about any account (which is good for the numbers), but discouraged employees from securing Just any account since ample care needs o be taken to ensure the account would be revenue generating. Hence, each class of employee, pushing for the best scenario of things that aligns with their form of reward schedule. However, aligning the reward schedule would promote a synergistic approach to securing accounts for the bank and raising revenue since both sides of the chain of command would benefit from such a schedule equally.
This would in turn, increase Job satisfaction, as employees would feel more appreciated and again, increase organizational commitment as these two concepts usually inter twine. 2. Extend transition period: Transition from National City way of doing things to the PNC way of doing things was set at 6 months, divided into 4 waves. The first wave was completed in a month and Wave 2 and Wave 3 took 3 months to be fully completed and rolled into Wave 4. The almost hurried transition in non-overlapping markets still causes expensive glitches for employees and customers.
With the challenges already set forth in this paper, it is of my belief that the transition period be stretched out for about a year to provide enough time for the physical but more importantly, psychological change. Employees were used to dealing with a certain class of customers and have to make an attitudinal switch to match the demographics of its new customer base and as such would need more time to make the switch. The training and coaching required for an effective switch must be undertaken in a gradual and methodical manner. Only then can the employee re-orientation be effective and problem free.
In recent weeks, using employee feedbacks, PNC has begun setting up in-store online training modules for their employees to coach them on selling to the desired target audience. Employees n direct contact with customer need to be able to assuage customer fears about upcoming changes. To do this they will require a separate training on handling these questions and be completely knowledgeable about all the details of the transition. 3. Customize Product to Footprint: Currently there is a wide disconnect between PNC and National City product offerings.
Legacy National City employees who now have to learn the new product being offered need time to get accustomed to the details in order to properly sell them. Management should align the products to appeal to the customers in new ootprints, gradually customize deposit accounts to eventually reflect PNC’s focus. The legacy employees attempt to sell these new products to customers. Legacy employees used to doing things the National City way would better and quickly adjust smoothly to the change when product offerings are gradually adjusted to reflect market preference.
Employees in the position of administering these products to the new customers would possess more confidence while attempting to push these products and as such would be more productive in reaching sales goal and raising revenue for he company. The focus here should be the not only the easy transition of employees but the seamless moving over of National City customer to becoming PNC customers. Customizing the products to reflect local or regional demographic banking needs is critical to gaining customer loyalty and reassuring.
In Detroit, National City lost 28% of its customers as they found out that PNC was grandfathering (discontinuing) Free Checking Account to be replaced with PNC Access Checking. The new product would cost $25 per month to have and charges per check per processed. Rather than a udden Jolt to the customer and risking the loss of over a quarter or your customer base, a more customer sensitive approach would be to spread the fee out over a period of time, while explaining to the customer every step of the way the reasoning behind the fee schedule. 4.
Better Communication: Going forward, PNC and National City should do a better Job at communication, especially process changes as huge as an organizational change. In this case, the change was an organizational change, which includes, norms, values, even customer as well as employee perception. All these factors serve as critical blocks in the akeup of any organization and as such should be treated carefully. A huge change like a merger, which would grossly affect employee dynamics and individual Job duties and scope, should be communicated way in advance.
In the case of National City, the legacy employees were made aware of the change the same day a press conference was released. Such announcement, even in its best case dampens the morale of employees in any organization it occurs in. This is mainly due to the fact that employees would clearly feel alienated from the decision making process or have any assurance that their voices were heard or treated with regard. This dampened state of morale usually could again, lead to gross Job dissatisfaction, lower organization commitment, lower productivity and ultimately, lower revenues for the corporation. . Appropriate training: With the new merger now in place, and employees mostly disoriented by the new requirements of their Jobs and stark differences from the old ways, PNC and National City need to perform some disaster recovery activities in the capacity of extensive training for the legacy employees. As afore mentioned, the new demographics and new product detail will require some getting used to by the older employees and the ne sure way to align this would be some quality training.
This comes at a cost but the advantages that National City stands to gain by implementing a quality, detail oriented, training program far outweighs the problem it currently faces with somewhat confused employees attempting to make the best of a grim situation. Implementing the mentioned suggestions should go a long way in remedying the current situation of things at National City and create a better rapport between managers, employees and their Jobs. Ideally, it would also promote Job satisfaction employee productivity. Conclusion
As studied in class discussions and case studies, work environment and dynamics in it, are very crucial in determining the quality of work completed in that environment. Employees, being the building block to the revenue generation for virtually all corporations need to be monitored as to ensure that they possess an acceptable level of Job satisfaction. In the same vein, managerial decisions play a key role in organizational behavior, dynamics and morale and as such direly need to made with utmost care and usually after extensive research so as to promote organizational health at all times and avoid an institutional collapse.