Bank of America
Bank of America is a major financial institution that has been operating in the United States for over 110 years (Cheung & Holbeche, 2015). The firm has its headquarters in North Carolina, with several branches all over the country (Anderson, 2012). It also has branches in over forty countries around the world. According to McLean (2006), Bank of America is one of the United States’ financial institutions that have achieved success in the global market. The firm has several branches in Europe and Asia-Pacific. It also offers mobile and online financial services to its clients in any part of the world. The firm currently employs over 200,000 people in its many branches across the world. It is one of the most successful financial institutions in the global market and is currently considered one of the industry leaders. It has a strict employment policy as it seeks to ensure that its organizational culture is practiced all over the world. The researcher has worked in this bank and therefore understands its culture, and that is why it was chosen for the study.
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Relationship with the bank
I am a former employee of Bank of America. I have been a client of the bank for the last six years. Within these six years, I have been pleased with the services offered by this firm. It is almost possible to predict how the employees of this bank in foreign markets handle customers because the firm has a clear policy that dictates how its entire customer care unit is run. It was for the short period that I worked at one of the branches of this firm that it became apparent how this firm achieves uniformity in customer care management. I noticed that the firm has been keen on promoting employees with a detailed understanding of how the firm is run. In most cases, regional managers were once working at the firm’s headquarters.
Historical information about the bank
Bank of America was founded in 1904 by Amedeo Giannini, an Italian who had immigrated to San Francisco, the United States. The first name of the firm was the Bank of Italy. During this time, Anderson (2012) says that most of the banks in the United States were only serving the wealthiest families. Moreover, most of these banks were very discriminatory, always serving a section of the society. Giannini came up with this small financial institution to serve the middle class and the rich who could not access the services of the mainstream banks because of their race. He started the business by accepting deposits and soon started lending money to trusted clients. The firm grew very fast, and in 1909, it expanded its operations to the Bank of America National Trust and Savings Association. The firm expanded its operations outside California in 1983 when it opened a branch in Washington (Anderson, 2012). Since then, the firm has experienced massive success, expanding to the global market through acquisitions.
How to diagnose the organization
Bank of America has experienced massive success in its globalization strategies. However, the culture of employing the parent country nationals to head its branches overseas is an issue that should be addressed. It is a sign that the firm does not trust the host country nationals enough to allow them to lead these overseas branches. This problem can be easily diagnosed by conducting an audit of the managers in the overseas branches.
Need for Change
Need for change
According to Yaeger and Sorensen (2009), emerging technologies in the field of transport and communication have turned the world into a small village. Currently, a chief executive officer of a global firm can monitor the activities of its companies in various parts of the world without necessarily leaving the office. Multinational corporations have also embraced a new trend in their globalization strategies which is in line with the emerging technologies. Many firms are now employing the host country nationals to head their foreign branches because they know that the activities taking place at these branches can be monitored remotely from the firms’ headquarters. Another major reason why many countries are hiring host country nationals at the top position is the need to earn their trust. Hiring the host country nationals is a clear indication that the top managers of the firm trust the locals and believe that they can deliver the desired results.
Anderson (2012) also says that although the world is increasingly becoming globalized, cultural practices around the world still differ, which creates differences in the way employees behave. For instance, most of the Japanese still find it comfortable working for 9-12 hours a day. Some may even work for over 14 hours in a day. However, most of the Italians work for 7-8 hours a day, sometimes less. Taking a Japanese manager to head a firm’s branch in Italy can be a disaster. It requires a local manager who understands the locals and can steer them in the direction of success without making them feel frustrated. Bank of America, however, has maintained a culture of hiring the parent country nationals. These parent country nationals are unable to understand the local forces that affect the locals in their operations. This makes it very difficult for these locals to work well with their managers. In such environmental conditions, achieving success can almost be impossible.
Data needed to confirm the need for change
According to Cheung and Holbeche (2015), a leader can only achieve success in a market he or she understands properly. All other employees look to their leaders to provide them with a vision on how to achieve success in the market. It is important to note that a strategy that worked in the United States may not work in another country. Target Supermarket is one of the best examples of how a firm can fail in the International market if it fails to understand the local forces. The top management unit assumed that Canada, a North American country that shares most of its borders with the United States, has a similar business environmental condition such as that in the United States. It appointed the Americans to hold senior positions at the firm. Four years down the line, the firm realized that its operations in Canada were not sustainable because of the serious losses it was making. It ended its operations in Canada after making a $ 5.4 billion loss (Alexander, 2008).
Another good case that can help demonstrate the danger that Bank of America could face if it continues with the current strategy is the move by Wal-Mart to invest in Germany. The firm invested a total of over € 1.1 billion into this project that failed soon after. It ran into losses of about USD 200-USD 300 million per year during its final years in Germany because of its inability to understand the local forces in the foreign market. This data shows that Bank of America needs to review its employment policies to avert such massive losses in the future (Munizzo & Virruso, 2009).
Level of analysis to be applied
In this research paper, the level of analysis will be narrowed down to micro-analysis. The focus will only be on Bank of America and the consequences that it may face as a firm if it continues to hire the parent country nationals to head its overseas branches. The analysis will not dwell so much about what may happen to other firms or industries if such employment practices are embraced, especially by large firms such as Bank of America. The researcher will only focus on this bank, its employment strategies, reasons why it should change, and the benefits of changing to a new culture or consequences of maintaining the current culture.
The researcher is recommending a simple solution that can be used to address this problem and help the firm achieve success. According to Yaeger and Sorensen (2009), the financial sector is one of the industry’s that has become extremely competitive in the global market. Bank of Africa faces stiff competition both in the local and international markets. Because of the variety of options that clients have in the market, they always tend to go to the banks where they feel their services will be met best. That is why Islamic banking has emerged and became very popular in the Middle East and other Islamic nations. It is not possible to bring a Christian, born and brought up in San Francisco to head an Islamic Bank in Mecca, Saudi Arabia even if he has extensive knowledge and experience in banking. It is only a local who understands the local practices that can know the dynamics of society and what influenced them whenever they need financial services.
Bank of America must start employing the locals to head its international branches. The research recommends that if a firm plans to send a parent country national to an overseas branch, then such an executive should be assigned the strategic roles such as chief financial officer. In such roles, they do not have to interact with the locals in most of the cases. They do not have to interact with the local employees and neither do they have to interact with the local customers. The top positions should be held by the locals as a way of convincing them that the bank cares about their interests. Hiring a local at the top position also eliminates the possible conflicts that can easily arise due to the misunderstandings that could arise if the firm is headed by a foreigner.
According to Cheung and Holbeche (2015), one of the main reasons why firms sometimes consider sending parent country nationals to head foreign branches is the lack of the needed skills and experience within the local country. Some firms also consider hiring parent country nationals as the only way of maintaining the organizational culture of the firm across the globe. This could be the main problem why Bank of Africa is forced to hire the parent country nationals in these overseas branches. The firm will need to come up with proper intervention mechanisms that can help solve these problems. One of the effective intervention measures that can be used is to hunt for the talents within the local population. For instance, if the Bank plans to open a branch in Baghdad, Iraq, it should look for an Iraqi with the right skills and experience who can head the firm in this city. The talent hunt may even be extended to the United States. This means that the firm can look for an Iraqi who came to the United States for higher education but is willing to go back to his home country to manage the operations of the firm.
If it is the issue of organizational culture that is forcing the firm to hire the parent country nationals, then an effective intervention would be used to send the selected top managers in the host countries to the firm’s headquarters in the United States for two months. Within that period, such employees will be expected to work alongside colleagues in the parent country and learn the culture that is embraced. During that period, they will be inducted into the systems of this firm, its practices, the approach when making difficult decisions, and how to manage the work force. They will be informed to find a way of emulating such management styles in their local branches based on the local forces.
How to determine the success
This proposal should bring success in the firm’s operations if it is implemented appropriately. According to Cheung and Holbeche (2015), success can be measured in different ways. One of the best ways of measuring success in case this proposal is implemented is by determining the level of employees’ satisfaction before or after the implementation. When the employees realize that one of their own has been appointed as the head of the branch, they get motivated because they know they can rise to such a position if they work hard enough. Such a manager will also understand his or her employees better because they share the same cultural practices. It is true that when employees are satisfied with the management, they tend to get motivated in whatever they are doing. Such employees are always very productive.
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The firm can take a more direct approach to determine success by evaluating the organizational performance before and after the implementation of the strategy. The firm can do this in several ways such as determining growth in the market share, growth in profits, or an increase in the level of customer satisfaction. All these are the factors that indicate a bright future for the firm if the current practices are maintained. It is expected that when the locals are assigned the task of leading the local employees to provide the products needed by the locals, then chances are high that the organizational performance will be high. In case it is confirmed that the performance has improved, then it will be clear this proposed solution is effective enough in delivering the desired success.
Logical steps in the firm’s development
The organizational development based on the proposed solution should follow specific steps. Unfreeze-Change-Refreeze Model of Change Management may help in implementing this proposal without causing any fear or resistance among the relevant stakeholders.
As shown in the above figure, this model emphasizes the need to unfreeze before introducing an actual change within an organization. The unfreezing process entails the creation of a debate among the stakeholders and explaining to them the reasons why the current system which is in use has become unsustainable. Stakeholders must understand why change is necessary and the specific areas that the expected change will address. It makes the stakeholders psychologically prepared to deal with the new systems that are to be created. When stakeholders have appreciated the need for change, then the actual process of introducing the new concept will begin. In this case, stakeholders will be informed of the new employee-recruitment program, and how it will be applied. The stakeholders will be informed about the new strategy and the reasons why it is important. The last stage of the implementation will be refreezing. The refreezing process entails internalizing the new concepts and accepting them as integral parts of the policies and values of the firm. The stakeholders will be expected to appreciate that going forward this will be the strategy that shall be used to recruit the employees to head the foreign branches.
Bank of America is one of the leading financial institutions in the global market. The firm operates in over 40 countries outside the United States. It is clear from the discussion that this firm should change from its traditional style of hiring the parent country nationals to head its overseas branches. Instead, it should start hiring the host country nationals in these top positions. This new strategy will not only reduce the cost of operations but also motivate the local employees. The strategy will also attract more clients in foreign markets because it will win their trust by delivering the products that meet their local needs. If implemented properly, this new human resource management strategy will improve performance in the foreign markets.
Alexander, C. (2008). Market Risk Analysis 1: Quantitative Methods in Finance. Chichester: John Wiley & Sons.
Anderson, D. (2012). Organization development: The process of leading organizational change. Thousand Oaks: Sage Publications.
Cheung, J., & Holbeche, L. (2015). Organization development: A practitioner’s guide for OD and HR. New York: Cengage.
McLean, G. (2006). Organization development: Principles processes performance. San Francisco: Berrett-Koehler Publishers.
Munizzo, M., & Virruso, M. (2009). General market analysis and highest and best use. Mason: Cengage Learning.
Yaeger, T., & Sorensen, P. (2009). Strategic organization development: Managing change for success. Charlotte: Information Age Pub.