The structure and culture at Bank of America is directly related to the company’s execution of strategy and objectives. There are several key factors that should be considered when evaluating how the structure and culture of Bank of America interacts with the strategy it sets to be successful. These factors include; organizational structure and control, culture, leadership, human nature and motivation, decision making, strategy and employee goals and objectives. For each of these we will explore what is currently working well, what still has opportunity for improvement and if applicable, what those improvements could look like.
Organization Structure and Control The first key factor to consider is organization structure and control. According to Chron. com, in an article by Alexis Writing, “Organizations are set up in specific ways to accomplish different goals, and the structure of an organization can help or hinder its progress toward accomplishing these goals”. Bank of America’s organizational structure is a matrix structure. This means that it is a hybrid between the two other main types of organizational structures Divisional and Functional. Divisional Structure
Alexis Writing’s article on Chron. com also states, “Divisional structure typically is used by larger companies that operate in a wide geographic area or that have separate smaller organizations within the umbrella group to cover different types of products or market areas. ” This structure type is applicable to Bank of America because of how large the company is. The company is divided into different lines of business which are the divisions of the bank. The different divisions operate globally to run their areas of the business.
One of the divisions of Bank of America is Consumer Banking which is what most people in the United States are familiar with when they think of Bank of America. The second is Global Banking Markets. This area of the company focuses on solving banking needs in countries outside of the US. Next there is Global Wealth Management serving our wealthy clients requiring more specialized services. Then there is Global Tech and Ops which is responsible for the back office operational support to all the other areas of the business servicing customers.
The Global Marketing and Corporate Affairs line of business is the division of the bank which focuses on marketing and branding efforts. The Legal department is another critical line of business focused on protecting the company and mitigating risk from a legal perspective. Global HR has the enormous task of personnel management for the entire global footprint of Bank of America employee base. The final two lines of business are Global Compliance and Global Risk Management. Both of these divisions of the bank work in tandem and are focused on mitigating risk and minimizing exposure in the marketplace Functional Structure
In addition to the Divisional, Bank of America has aspects of the Functional Organizations Structure as well. In a functional structure areas of the business are grouped collectively according to the area of the business they are responsible for in the organization. This is why the HR department, Marketing department and Legal Department are each their own division of the company handling their respective more specialized functions. While Bank of America is a large and complex organization, our company is not hesitant to restructure and reorganize the business in anticipation of or to fulfill market needs.
What’s Working, and What’s Not What works well about this flexible organizational structure is that changes can be made more quickly even though there are many moving parts. This allows the company to adjust to market changes and get ahead of upcoming obstacles. What continues to be a challenge in this organizational structure is the confusion that exists at times with employees trying to figure out whose reporting structure they belong to. Another challenge with a fast changing environment is with employees knowing whose message they are expected to follow. Culture
The second key factor to consider would be the culture at Bank of America. For the five years that I have been employed at Bank of America, the focus has been on developing a customer centric culture. This is evident by company’s purpose which is “Making Financial Lives Better though the Power of Every Connection”. Several years ago when CEO Brian Moynihan debuted the company’s new purpose statement, he shared a story about a conversation that he had over breakfast with his 10 year old daughter. He shared that one morning, while eating cereal she asked him what he did for a living.
He told her he was a bank CEO. Of Course she wasn’t satisfied with that answer and asked again, what he really did every day when he went to work. He said he thought about it for a while and then calmly responded to his young daughter that what he truly does each day is help to make financial lives better for customers of Bank of America. I remember watching him share that story at a town hall meeting and thinking to myself, how proud I was to be a part of a company with such a simple and customer centric purpose.
What a proud moment that was for me. To know that my company had simplified the many different messaging that I had received over the years to something that made sense in my mind was a breath of fresh air. This was the beginning of a huge culture shift within Bank of America. At a time when the financial industry was in ruins back in 2009 and 2010, Bank of America began to rise from the ashes of the foreclosure crisis by putting the focus back on the customer.
This defining moment in the company’s shift in culture, took us from doing what was best for the business fist and always to putting the customer at the center of each and every decision. What’s Working and What’s Not What worked well is that this paradigm and cultural shift helped the company to regroup and shed excess weight it once carried around and ultimately put the focus on the simple task of improving financial lives. As a result of the changes, customer perception improved and this began to reflect in the stock price.
What did not work well is was how long it took for all areas of the business to get aligned under that new purpose and shift in culture. Things had been done a certain way for such a long time, that many long time employees had a difficult time adapting to the new direction of the company and chose to move on or retire. Leadership The third key factor to consider when evaluating the correlation between structure, culture and strategy at Bank of America is Leadership at Bank of America. Bank of America has a complex leadership structure.
Each line of business has its executive leadership representative that sits at the table with our CEO Brian Moynihan. In addition to Brian, the leadership team includes a reporting structure of sub executive leaders for each of the lines of business mentioned earlier. Like many other companies in the financial services industry, Bank of America has been trimming layers of non essential personnel including layers of management in the last 2 years. The concept behind this strategy is to bring the decision makers much closer to the customer.
There are several problems with this course of action. The first problem is that from the perspective of the customer, the business at times seems a bit disorganized and disheveled. Another problem is that since leaders are constantly changing employees are not always getting a consistent message. There are also times when gaps exist because of the differences between one leader’s communication style and another’s. Finally the techniques and decision making strategy of the leader is another component that employees have to adapt and re-adapt to whenever leadership changes are made.
When interviewed, Bank of America Banking Center Manager Erich Weisman stated that, “No one knows what is going on anymore. Some roles have been eliminated in the banking center and half of the people working in my location don’t report to me anymore. I have a new boss who I haven’t met yet and I was just getting comfortable with my last boss. I’ll be glad when things settle down. ” The leadership on the consumer side of the bank has really made that line of business a difficult place to work with the constant reorganization and rotation of leadership. What’s Working and What’s Not
What is working about the leadership at Bank of America is that the company is finally all speaking the same language about putting the customer first. Employees in the credit card department and employees in the mortgage department are now delivering similar customer centric messages to customer. The book Understanding Communication states , “For leaders and organizations, poor communication costs money and wastes time. One study found that 14% of each workweek is wasted on poor communication. In contrast, effective communication is an asset for organizations and individuals alike.
Because the leadership structure at Bank of America is complex, we have to better use the strength of our leaders to connect to our employees to drive the business effectively and efficiently. Human Nature and Motivation The forth key factor to consider when evaluating the correlation between structure, culture and strategy at Bank of America is Human Nature and Motivation. This concept of human nature and motivation at this company is translated into how the company invests in celebrating diversity and promoting inclusion.
The focus on people happens to be one of the aspects of the culture here at Bank of America that I most admire. Although I have worked at many financial institutions, Bank of America was the only one that made me feel as if it was ok to bring my authentic self to work. By this I mean the characteristics about me that make me different from those around me were enthusiastically encouraged and embraced. I wasn’t told how to wear my hair or how to talk. I was just told to be professional in how I represent myself. I was left to interpret what that meant to me and how to best display it.
Employee Network Organizations Bank of America sponsors Employee Network Groups that are focused on connecting individuals with similar interests and ensuring those individuals feel welcomed and accepted into the organization. Some of the different employee networks sponsored by the bank include the Asian Leadership Network, Black Professionals Group, Hispanic Organization for Latino Advancement, Military Support Group, LGBT Group, Disability Advocacy Network, Native American Group and Leadership Development of Women Network.
What works well about these associations sponsored by the bank, besides that they speak to the company’s commitment to its people is that these groups help those that are different from the majority to feel involved and appreciated. They help to drive the narrative of openness and an overall embracing of diversity. As an employee of this company, I can attest to the benefit of having a company sponsor associations like this that exist within the organization. I can attest to the value add and increased motivation and organizational commitment I feel because I am involved in several of the employee network associations.
What’s Working and What’s Not What does not work well about these groups, falls into the large number of employees who don’t participate for one reason or another. Another area of opportunity for these network groups happens to be that employees feel that if they don’t fit into a certain group they shouldn’t participate with whatever activities are sponsored by that group. This causes an unfortunate roadblock limiting employee connections as some are afraid to step out of their comfort zones and learn about people different from themselves.
Overall, while there are positives and negatives associated with Bank of America’s network groups, it is my belief that employees at this company are benefit tremendously from working for a company like Bank of America, which is willing to invest in them through the support of employee networks. Decision Making The fifth key factor to consider when evaluating the correlation between structure, culture and strategy at Bank of America is Decision Making. At Bank of America, Decision Making is very centralized which is not always a good thing.
Although there has been tremendous change in the last 5 years, most of the decisions driving the changes were from the top of the house. The different divisions of the business get direction from the executive team on how their areas of the business will be run. There also tends to be some “escalation of commitment” at times during decision making, even when the results say that the decision may not be the right one and a course correction may be in order. An example of this happened recently in the Consumer Banking division.
A change was made to how the banking centers would be structured and this decision resulted in a large amount of turnover as employees did not buy in right away to the change or understand the logic behind it. This is typical of how decisions are made in that line of business but this particular decision did not hit the mark and a minor revolt ensued. What’s Working and What’s Not I think my company has much to learn when it comes to how some decisions are made and how they are communicated to employees.
What would be truly helpful is an employee survey to solicit true and honest feedback from employees prior to making changes. Gaining buy in is the part that is ultimately missing in the decision making process at Bank of America. While decision making is one of the areas of opportunity at Bank of America, there lots of positive changes that have come about in recent years and as long as those continue on, we are heading in the right direction and will continue to produce shareholder value.
Strategy The sixth key factor to consider when evaluating the correlation between tructure culture and strategy at Bank of America is Bank of America’s overall strategy is to bring the full power of the franchise to customers, through the power of every connection. Strategy is about designing a plan to create value for shareholders, employees and customers. If you read the About Us page on the company website, the company’s mission is stated as “Serving the core financial needs of people, companies and institutional investors, delivering our capabilities through our eight lines of business.
The eight lines of business are Retail Banking, Preferred and Small Business, Merrill Lynch Wealth Management, U. S. Trust, Business Banking, Global Commercial Banking and Global Corporate and Investment Banking. In other words, Bank of America is saying “yes we know we are a large company but this is an asset to our customers because we have the resources and ability to take care of every financial need along in the journey of their financial life. The bank has made tremendous stride to define and execute its strategy in the 5 years I have been employed here.
I remember 5 years ago when I started working at Bank of America, in a banking center, having a customer ask me how they could apply for a car loan and not having any idea what area of the bank I could and should direct them to so that we could have a chance to earn their car loan business. I reached out to my manager at the time, and he also didn’t know who I should direct the customer to and recommended that I tell the customer to apply online. Since then, things have definitely changed.
When a customer comes into a banking center, instead of telling them to go online or call a phone number, proactive conversations are happening to uncover unmet needs the customer may have. Gone are the days of referring a customer to go online to apply for a car loan. Now you invite the customer to have a seat and give you an opportunity to review their entire financial situation so you can make recommendations that are most suitable for their situation. The strategy is changed completely and execution of is has much improved. What’s Working and What’s Not
What has worked well about this change in strategy is reflected in the increased stock price. Just last month Bank of America announced record earnings per share on its stock price. CEO Brian Moynihan attributed this success directly to the solid execution of the company’s strategy. What hasn’t worked well is just the amount of time it has taken different divisions of such a large company to finally get on board with the direction set by executive leadership to drive the business by referring to our customers to each other and operating as one team regardless of our size and footprint. The future is bright for Bank of America.
As long as all divisions of the company continue to execute our strategy we will continue to see progress even if it is slower that we would like. Employee Goals and Objectives The seventh and final key factor to consider when evaluating the correlation between structure culture and strategy at Bank of America would be Employee Goals and Objectives. To accurately align with the company’s strategy of delivering one team to the customer, the bank did a complete over hall of incentive programs and reporting structures. This was done to put talented employees closer to the customer and in revenue generating roles.
In addition, changing the incentive programs, to begin rewarding employees for referring their customers to their partners, resulted in exponential growth in areas of the business that had been stagnant for a very long time. The way these particular changes were communicated also played an important part in generating excitement and reinforcing the company’s strategy. What was once a chore to an employee to track down a representative to connect a customer with who had walked into a banking center asking how to apply for an auto loan became a welcomed delight to bank employees.
The incentive plans were changed to encourage that participation and collaboration that executive leadership knew we needed to turn the tide. Knowing that I could earn a larger incentive payout by helping to connect the customer immediately to the right partner changed my focus which was in alignment with the company’s goals and objectives. What’s Working and What’s Not What has worked well about the execution of the strategy through goals and objectives is the way the company now chooses to reward employees. Rewards are linked directly to the company’s objectives making them easier for employees to buy in to.
Employees are also making more incentive dollars than ever and doing so while doing what they believe is the best thing for the customers. What has not worked well with execution of the goals and objectives is that they change every 12 months. As soon as an employee begins to feel comfortable with the expectations, things change. It would be extremely beneficial to the company and employees if more thought was put into the execution of the goals and objectives to that a plan could last more than one year. Bank of America is one of the largest financial institutions in the world.
With over 57 million consumer and small business customers served in 40 different countries, it is clear to see what a global company Bank of America has become. While challenges still exist today, the company has made tremendous strides to streamline its operating structure. By investing in human capital and aligning employee goals and objectives to the company’s strategy, Bank of America has truly been able to satisfy shareholders, improve employee satisfaction and deliver on its promise of improving the financial lives of its customers.
