Agents of change?

Bank branch managers and the management of corporate culture change

Bjorn Brubakk and Adrian Wilkinson
Manchester School of Management, Manchester, UK
Introduction Corporate culture has had an increasing impact on the way both theorists and practitioners understand the processes in and the management of organizations. During recent years there has been an undisputed increase in both managerial and theoretical interest in the field of corporate culture (Watson, 1994; Willmott, 1993). This interest is not attributable to one single factor, but a concern with new and improved ways of managing for success has been a central theme. Ogbonna and Wilkinson (1988, p. 10) suggest that the key factors are: the dysfunctions and costs of traditional bureaucracies, and the rise in importance of personal services in many industries. Despite this interest though, it is still difficult to find industry-dependent analysis which provides a contextual account of corporate culture change. This article will analyse such processes by looking at the financial services sector in Norway. Corporate culture literature Corporate culture is a somewhat ambiguous concept, difficult to define and perhaps even more so to understand. Scheins (1985, p. 9) definition encompasses the most important aspects of culture by defining it as:
A pattern of basic assumptions invented, discovered, or developed by a given group as it learns to cope with its problems of external adaptation and internal integration that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems.

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Submitted July 1995 Revised October 1995

Corporate culture then, is not easily observable, and it is not the same as the behaviour one can observe when studying organizations. It can be seen as existing on several levels, with different features attached to each level. Huse and Cummings (1985), Schein (1985) and Kotter and Heskett (1992) all offer classifications of these levels, although both the number of levels (four, three and two respectively), and the classification differs slightly (see Figure 1). The basic idea is that corporate cultures deeper levels, the basic assumptions and the values, what Schein (1985) calls the essence of culture, exist on an invisible level. These assumptions and values are seen as extremely difficult to change, and any change in these assumptions represents a long-term effort by the organization. On the other hand, we have what Kotter and Heskett (1992) term the group behaviour norms, and Schein (1985) and Huse and Cummings (1985) call the cultural artifacts. These are typically easier to change and

International Journal of Service Industry Management, Vol. 7 No. 2, 1996, pp. 21-43. MCB University Press, 0956-4233

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Artefacts Norms Values

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Basic assumptions

Figure 1. Levels of culture

Source: Huse and Cummings (1985, p. 422), (Reproduced by kind permission of West Educational Publishing)

easier to observe, and are the manifestations of culture. Behaviour, according to Schein (1985) can be either a cultural artefact or it can be a reflection of the environment. There are two important implications arising from this. First, behaviour in organizations does not necessarily reflect the culture. In times of environmental change, it is probable that the behaviour will be a reflection of the environment rather than a cultural artefact. Second, cultures are not simply an internal management variable, they are subject to influence from the external environment (see Figure 2). It is also important to take account of the concept of subcultures. As Morgan (1986, pp. 126-7) observes:
Culture is not something that is imposed on a social setting. Rather, it develops during the course of social interaction. In organizations there are often many different and competing value systems that create a mosaic of organizational realities rather than a uniform corporate culture.

Such subcultures may offer small or large variations on the corporate culture. Individuals or groups within units of the organization may promote different or additional values inside their unit (Young, 1989). In recent years managing culture change has become one of the most debated aspects of management literature. Because organizations are faced with an environment where change is almost a part of the daily routine, organizations must adapt to and change accordingly. Probably the most difficult, most risky, and most disrupting change of all, is change in corporate culture. Huse and Cummings (1985) suggest that organizations should always

The operating environment

Agents of change

Reflecting environment

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Behaviour

Cultural artefacts

Corporate culture Figure 2. Organizational behaviour and culture Source: Schein (1985)

try other solutions before attempting cultural changes. Kotter and Heskett (1992) argue that the difficulties involved in managing these processes is underestimated. Not only are such changes disruptive to the organizational processes and procedures, they are also deeply disruptive to the individual members of the organization. This is not to say though, that culture changes should not be attempted or that they are impossible to achieve. Both Kotter and Heskett (1992) and Nakajo and Kono (1989) offer evidence of organizations where corporate cultures have been successfully changed to become more performance enhancing. The role played by leaders is an integral part of most texts on culture and change. Kotter and Heskett (1992), Peters and Waterman (1982), Nakajo and Kono (1989) and Schein (1985) all devote time and space to describing the role of the person or the persons that assert such a profound influence on the creation and maintenance of the corporate culture. Leaders have been found to play an instrumental role in guiding the organization through cultural change, as well as other organizational change processes (Huse and Cummings, 1985). Kotter and Heskett (1992, p. 92) believe that:
Leadership from one or two people at the very top of an organization seems to be an absolute essential ingredient when major cultural change occurs.

Moreover this process has to come from the top, because to change cultures one needs power at a level only found at the top of organizations, and usually the

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scope of change is of a magnitude that the only individuals in a position to change it is the top management. The work of Scheider and Bowen (1993) on organizational climate is also relevant to this research. They have emphasized the distinctiveness of the service environment and the importance of the employee customer front-line interface for the service experience. Schneider and Bowen point out that there is not a supervisor physically present in the employee-customer dyad who can exercise ongoing immediate quality control (quoted by Grnroos, 1990 p. 269). Given this it is argued that management need to create an appropriate climate which is conducive to good quality service. Such a climate includes both practices and procedures which facilitate such service, and management reward and support for providing this service. Hence there is both formal support (e.g. systems) and informal (e.g. people relationships and values). However, Schneider and Bowen tend to take a top-down view of such a strategy and have little to say on the role of the branch manager. Similarly, middle managers and supervisors receive little attention in the corporate culture literature. However, according to Kotter and Heskett (1992, p. 93), middle managers play an important part in major culture change, although they are not seen as being able to initiate such changes. They write that:
Ultimately, it is their actions that produce the changes.

The research In our research in the financial sector it is clear that the whole process of conducting banking is changing. Branches are becoming more concerned with sales and as the whole way of business changes, so does the behavioural patterns of the employees. As Boothe and Kitka (1989, p. 32) observed:
The commercial banking industry now more than at any other time in its history is directly confronted with a fundamental issue survival. Faced with further deregulation, continued competition from other financial service organizations, and rapid and unexpected change, commercial banks can no longer be just financially oriented; they must be customer, sales and service oriented. They can no longer sit back and expect customers, retail or commercial, to come to them. They must seek out quality consumer and corporate business and establish meaningful multiproduct relationships. In short, bankers must become marketers and salespeople; they must redefine how they do business.

Developments in the sector and (Cressey and Scott, 1992; Metzer, 1990; Wilkinson, 1995) suggest that leadership and strategic responsibility should be an inherent part of middle-management jobs. In fact, few sectors will have the potential to create subcultures and strong lower-level leaders, in the same way as the banking sector because of the fragmented structure of branches, and the influence a branch manager has on his subordinates. They are in most cases the highest ranking manager at the site and the highest ranking manager interacting daily with employees. Unlike in the manufacturing sector where senior managers are on the same site as middle

managers and can therefore provide a visible leadership presence, in banking the middle manager or branch manager tends to stand in splendid isolation. Branch managements role and influence on corporate culture change is thus the central point in this paper. The method chosen for this research was a qualitative case study approach. As the main objective of the research was to investigate corporate culture change, the contextualist framework of Pettigrew (1985; 1990) was utilized. Pettigrew (1990, p. 267) argued that:
Theoretically sound and practically useful research on strategic decision-making and change should involve the continuous interplay among ideas about the context of change, the process of change and the content of change, together with skill in regulating the relations among the three.

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Pettigrew (1985, p. 228) suggests that one of the key features of such an analysis is to:
Understand the emergent situation and holistic features of an organization or a process in its context, rather than divide the world into limited sets of dependent and independent variables isolated from their context.

The research was conducted in two phases. A pilot study was conducted at the beginning of 1993 and included one branch from each of the two banks chosen for the research. The remaining ten branches were researched in the main study in the summer of 1993. In total 75 people were interviewed, 40 in one of the banks and 35 in the other. Case one: Commercial Bank Commercial Bank (CB) bank is Norways largest commercial bank both in terms of total assets and branch outlets. It is the result of a merger between two major commercial banks in the late 1980s. The merger process has been deemed a success, with the achievement of a breakdown of cultural differences. The bank had a difficult start, and had at the time of the research not delivered a profit. Losses were high and have meant that the bank lost close to all its share capital and is in business today due to agreements with the Government Bank Insurance Fund. CB covers the whole Norwegian market. Each region comprises, a regional centre and outlets varying from seven to 45 branches. In the new sales oriented organization, the regional centres function as the administrative base, carrying out many of the tasks previously performed by the branches. In 1992, branches were renamed sales offices and branch managers sales leaders. Branches are now evaluated in terms of sales of products such as cash point cards, and loan and deposit volume development. In the process of becoming a sales organization, two other aspects are important: centralization and standardization. In Norway, unlike the UK, it hardly matters in which branch ones account is opened, as the same level of service and the same services are available in all retail outlets. CB is attempting to create a streamlined bank, where retail outlets all over the country are as

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similar as possible. Through moving administrative work and work with nonperforming loans to a regional centre, and through splitting the retail banking division from the commercial banking division, the earlier full-scale service branches have seen tasks and workforce cut dramatically. The consequence of these changes to branches and branch management will be a main theme in this paper. It is clear that the role of branch management in CB is one marked by change and where both responsibilities and tasks have been altered significantly. Case 2: Savings Bank Savings Bank (SB) is Norways largest savings bank, having a market share within this segment equalling that of its four largest competitors ( Johanson, 1993, p. 46). The objective of the bank, as summed up in the Annual Report (1992, p. 1) is:
To constitute the best banking alternative for private customers and small and medium-sized companies in its market area, which is primarily Eastern Norway.

Although the primary market is Eastern Norway, the bank has via district offices a nationwide coverage. SB is a new bank, the result of a merger between five of the major savings banks in 1990. The bank has changed its business philosophy, introducing concepts such as segmentation and sales in order to serve the customer base in a more effective and customer oriented manner. The strategy of SB differs from the one chosen by CB in that the former has chosen a more decentralized way of operating. In the 1992 Annual Report (p. 1) it is stated that:
A decentralised organization with delegated decision making power and a high level of expertise in the local branches provides proximity to the markets. Our objective is to work to make the term neighbourhood bank a reality.

This objective of being the neighbourhood bank relates to the banks strategy of being close to the customer, hence operating through a high number of outlets (179 in the eastern part of Norway at the end of 1992 (Annual Report 1992, pp. 54-62)). Second, historical factors play an important part. Prior to the merger, most of the district and regional savings banks that merged into savings bank had been through extensive processes of merging themselves. These savings banks have traditionally been integral parts of their local settlements. Municipalities and private customers have been closely interlinked with their bank. Hence the strategy of being the neighbourhood bank is one which is not only based on strategic considerations it is also one deeply rooted in the history of the banks. Background to the research findings Before discussing our key findings it is necessary to examine some contextual issues related to culture change, including a framework for viewing culture

change and a closer examination of the content of the changes made by the two banks. A starting point is managers perception of the changes:
Whats important is that behaviour changes. We can forget attitude, because it is action and behaviour which is important Poor behaviour and good behaviour is to be punished or rewarded. You cant punish or reward good or bad attitude. I feel it is up to the individual to recognize the possibilities that the employer creates. You are the only person who can change your values. You have to accept the possibilities, or else youll fall behind. I dont believe in anyone changing my values Attitudes is one thing, but it is the personal behaviour that will have to be changed. To learn to do something different.

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Thus these managers did not believe in changing the values or attitudes of their employees. Rather they demanded a new pattern of behaviour. This was further highlighted by one of these managers who commented on how far such concepts had to be forced on employees:
There must be somebody who keeps it up, and we do that through weekly sales-meetings, keeping it rolling. And when the behaviour is of a kind where it is the goal and the wish for every individual to sell, thats what it is all about. You get much more self-driven, everyone will have to become that, in relation to your own goals and budgets. You have accepted responsibility.

Hence by highlighting the importance of changing behaviour and by reinforcing this behaviour they believed employees would gradually come to terms with the new demands and change their values and assumptions. It should be emphasized that not all the branch managers took this stance. Some branch managers talked about changing employees values and attitudes directly. One can see culture change as a process where managers first make employees behaviour change and then reinforce the desired behaviour. This takes the form of a learning process. These ideas provide us with a framework for culture change, making it possible to isolate two steps in that process. This is not to say that these two steps are in reality separated, but by separating the process into these steps, we are better able to conceptualize managerial activities as part of the culture change process. Thus, Figure 3 is a framework for viewing culture change, emphasizing both the change to new behaviour and the reinforcement of that behaviour as important. The research revealed several changes in the work operations of the banks. These changes represent a clear shift in the organizational culture if successfully implemented. Bank employees are no longer a safe group with high job security. Hence, managers now demand and strive for a level of professionalism. Thus one manager said:
I think we have to express clearly what the bank is from the starting point of the sales organization we are now clarify what expectations, what framework a cashier, a clerk works within and a salesman works within, so that we get rid of the old role when youre here from eight till four and you are allowed to be unpleasant if you want to. That shouldnt be accepted anymore.

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Behaviour as cultural artefact

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Step 1: Change behaviour

Behaviour as environmentally reflecting

Step 2: Reinforce new behaviour

New behaviour as cultural artefact Figure 3. Culture change simplified Source: Author's research and Schein (1985)

Such demands have been rare up to now in the banking industry. Employees have not been measured and there has been little in the way of formalized performance evaluation. Of course it is possible to argue that such changes are a temporary adjustment to conditions. Thus one needs to examine the environmental trends that have caused the change in the first place, i.e. the changes in the outer context. Cultures are by the definition used here subject to external adaptation (Schein, 1985). If the changes in the environment are permanent and consistent with the new behaviour of the organization, then this would indicate that the behaviour would be learnt as appropriate, thus moving from behaviour reflecting the environment to cultural artefacts, implying that it has become part of the core culture. According to some employees:
Its beginning to get rooted now. We have been in a period of change I think we have done well. We got a list yesterday with the things we said in the beginning its a culture change, a change in attitudes. Some saw that earlier than others.

The sales-culture that has been introduced is beginning to get rooted among the individual employees it is something that lies in the future. The culture in this bank has been like sitting on your high chair, and meet the inferior customer and help them as well as possible. Attend to them. Now the whole bank-culture is turned upside down in a year or two. We have got to get out to the customer, we cant sit and wait for the customer to get to us. The whole range of products is pushing the customer out of the bank To amplify slightly, a normal wage earner, a normal, average customer, an employed person with a mortgage, a car-loan, a standard customer relationship, will no longer have to come to the bank unless there are special circumstances And that creates a whole new way of operating for us, we have to get out and get hold of the customer either at home or at the workplace.

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Not all employees and managers were as positive. Thus, two managers said:
No, it [the proactive culture] creates great uncertainty. And some employees feel that it is a bit too pushy, its unpleasant. Maybe the customer has been somewhere else and got the same inquires. They find it difficult to do cross-sales and other activity than what the customer came to do but it is a change in attitudes going on now. Employees see the necessity when they look at the accounts and that this is the way other banks operates. And its the fact that the customers no longer go to the bank as often as before, so we have to try and get hold of them when we can. No, we have maybe taken the first step on the ladder. And it is not rooted We are in the introductory phase of a new way of operating.

How can we explain these differences in perceptions about the change? First, there were clear differences between the units, both between branches and within banks. In some branches the change process had started four or five years ago while in others it had just begun. Second, the managers with their broader insight into the actual changes often took a more negative view as to the extent of change. They knew that a culture change was a lengthy and far reaching process. Employees who lacked this insight, often thought the changes already carried out marked the entire change effort. Interestingly though, none of those interviewed thought the old behaviour would return. Branch managements importance in culture change As we have noted most texts on corporate culture have to a large extent neglected the role played by middle- and lower levels of management. One of the main objectives of this research was to investigate branch managements role in the culture change process, and identify the significance this level of management has in the process. In the interviews questions were asked as to who employees and managers had perceived as being the most important change agent, and who the interviewees felt was the symbolic leader to branch staff. The findings can be seen in Tables I and II. The role of the CEO The CEO has traditionally been seen in the corporate culture literature as the most influential change agent. However, our findings tell a different tale. No one in either bank neither manager nor employee perceived the CEO in their banks as their main change agent. This is not to say that the CEOs had not been

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Branch manager Lower-level manager District managera Regional manager CEO Ex branch manager Sales manager regionb Other

SB employees

SB CB branch managers employees

CB branch managers Total

32 39 7 4 0 4 14 n1 = 23 n2 = 28

50 25 25 0 0 0 0 n1 = 04 n2 = 04

91 0 0 0 0 9 0 n1 = 22 n2 = 22

50 0 17 0 0 17 17 n1 = 05 n2 = 06

57 20 5 3 0 2 5 8 n1 = 54 n2 = 60

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Table I. Who was perceived as the most important individual change agent by employees and managers

Notes: n1 = Number of respondents n2 = Number of answers (some interviews named two or three individuals) a Only applicable in SB b Only applicable in CB All figures are in percentage of n2

SB employees Branch manager Lower-level manager District managera Regional manager CEO Other

SB CB branch managers employees

CB branch managers Total

58 3 36 0 0 3 n1 = 29 n2 = 31

33 22 33 0 0 11 n1 = 06 n2 = 09

86 0 0 7 0 7 n1 = 27 n2 = 29

75 0 0 25 0 0 n1 = 04 n2 = 04

67 4 19 4 0 6 n1 = 66 n2 = 73

Table II. Who is the symbolic leader to the people in this branch

Notes: n1 = Number of respondents n2 = Number of answers (some interviews named two or three individuals) a Only applicable in SB All figures are in percentage of n2

influential in originating the process. It is merely stating that to the branch employees and managers, the CEO had meant little to them in the culture change effort. Thus, one of the lower level managers said:
It is important that we have a CEO who is on the team and can be inspiring, either through a meeting, or through newspaper information or media. I think it is an important factor that we know we have the backing of the CEO. But that he can have any day to day influence, I dont believe in.

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This manager thus believed that the CEOs role had a more symbolic character, someone the employees identified with when appearing in the media, but with no real influence on the daily running of the branches. Employees comments included:
That is a person I only watch on television and read about in the internal news He really doesnt mean more to me than the CEO of CB or Christiania [other banks]. He is a man I have never spoken to and has never been here. We feel he is high above us I think he is very distant.

These quotes indicate that the symbolic leadership from the top, thought of as so crucial in most texts on culture change, is close to non-existent in the perceptions of staff. It should be mentioned that very few actually criticized the CEOs for not being more involved: they all seemed to understand his role as being a distant one. It is clear though that top management was not perceived as playing the role of the individual leading the change. The role of branch- and lower-level managers It is evident from Table I, that branch and lower level managers were perceived as the most influential change agent by more than three-quarters of the interviewees. The crucial question then is why employees had this perception. To answer this question requires a closer examination as to how culture change is carried out. The first step of the culture change process, changing the behaviour of employees, has been achieved by changing systems and structure, and through the new branch measurement system. Through these new systems, regional and national management have been able to monitor the branches to ensure that staff have adopted the new behaviour. Branch managers at this step of the culture change process can be seen as vehicles of change, even if it is not their actions which have initiated the change. Rather, it is the centralized changes in systems that have created the changes and thus been the driving force in the change effort. However, it is clear that branch managers who act as the key link between head office and branches have a critical role. One of the branch managers, commenting on the importance of branch- and lower-level managers said:
It hinges on that. I believe that if I am negative about anything that is to be carried through, then it wont happen at all I believe I could constrain my whole branch if I didnt stand on his [the regional managers] side all the way down. I could be a major brake. So major that only parts of it could be carried through. And I feel that further out in my sections, that if my

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managers are a bit negative about something new, it takes far longer than if they really want to do it.

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Thus branch managers proximity to employees, and opportunity to identify conflicts and problems in conjunction with the change as well as decoding corporate messages for employees play a key role in managing change. The second step in the culture change process was identified as the reinforcement of new behaviour. The research indicates that branch- and lowerlevel managers play a significant part in this. If the sales performance in a specific campaign was seen as good, there were rewards such as branch members getting an outing and other trinkets. However, employees generally responded indifferently to the formal reward systems of the bank. The large majority of the interviewees did not think this made any difference to the sales effort, and they did not see this as a major motivator. Rather, it was recognition via the daily reinforcement from branch- and lower-level managers that mattered the most. Employees views included:
I believe that it is important that we have one central figure to relate to. His ability to influence us is rather important. Where else should we get the signals from. The closest leader is the most important The co-operation there is pretty close, at least it should be. And they have much more insight in what the individuals do than they have further up and have the opportunity to back us up and give praise.

There were differences found between the banks regarding the two issues. The first of these is the stronger position held by lower-level managers in SB in terms of being identified as the most important change agent. These lower-level managers were most often managing the cashiers function and reported directly to the branch manager, while the branch managers were more directly involved with the personal bankers and the sales consultants. However, while lower-level managers were seen as the main change agent in SB, they received no score in CB. As there are only small differences in terms of the number of lower-level managers, other factors seem to have caused this difference. Managers in SB worked closer together, functioning more or less like a management team, while in CB, lower-level managers only existed in the larger branches. The branch managers in these larger branches were more leaders in the true sense of the word, more distant and more symbolic in nature. One should also not forget the personal effect of particular managers which can influence these results. There were in fact only two branches in SB where the lower-level managers were perceived as the main change agent. These two branches had exchanged lower-level managers for a year in order to carry out the reorganization with a new and fresh member of the management team. This change seemed to have been extremely purposeful as they in both cases were seen as the main contributor to the change effort. The second main difference can be seen in Table II. While branch managers in CB are seen as symbolic leaders to almost nine out of ten employees, the corresponding score in SB is approximately six out of ten.

The explanation for this is the strong position held by the district managers in this bank. The district managers in the SB are located in the main branch of the district and in many ways are in charge of that particular branch even though there are heads of the different sections; in both these two branches, staff viewed the district managers as their symbolic leader. This explains why branch managers held a stronger position in CB where the closest leader was the regional manager, who was clearly more distant from employees. Change agent versus symbolic leader Finally, there is the difference in scores between symbolic leaders and main change agent. It has been argued that only managers exercising a strong symbolic leader function can implement major cultural change. The evidence offered from this research indicates that this is not necessarily the case. The lower-level managers at SB were seen by more than a third of the employees as the main change agent while less than 5 per cent saw them as their symbolic leader. Again, this conception might have been caused by how one perceives culture change. As discussed earlier, one interpretation is that culture change is a behavioural change followed by a strong reinforcement of the desired behaviour. From this viewpoint, where value change is left to the individual, and organizations concentrate on the behaviour, managers can exercise substantial power on the actual change effort without having the status of symbolic leader. Branch managers and change The reluctant managers? Having showed the importance of branch managers in the culture change process, it is necessary to examine more closely how managers committed themselves to change. An initial hypothesis when viewing the large scale changes that have taken place, would be to suggest that branch managers would be reluctant (Scase and Goffee, 1989), acting as compliant managers in a context where power and tasks are being removed from the branches, with resources and authority centralized. However, this did not appear to be the case. There are several reasons for this. The most obvious is perhaps the fact that both organizations just as the industry in general had run into a serious crisis. It is no new phenomenon that change at least of this magnitude is achieved more easily when the organizations are in a crisis. Two of the managers interviewed stated:
It is clear that to introduce a sales-culture when you do not need it, i.e. when the customers come to the bank you dont even have to talk about It is clear that the situation we are in, where you have an alternative nobody wants, makes the process of change go much faster. On a management level I think this [the change] has sunk in quickly. One has recognized the importance of it.

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The situation has therefore created an environment where change is easier to conduct. Most staff, have seen and understood the need for change.

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The new managers Understanding that change is necessary is not the same as agreeing with the direction of the change. The average branch management tenure was less than two years in CB and around four years in SB. This clearly indicates that at least in CB an almost entirely new set of branch managers have emerged after the reorganizations. The previous set of branch managers had moved to other divisions or to regional staff functions. By appointing this new set of managers (promoted from within) the banks presumed that they would more readily get people committed to the change in key positions and less hostile to changes such as recentralization of responsibilities. One problem specific to the new set of managers is the backlog of work they have brought with them from their old positions. As they are mostly given internal promotions, the customers they previously had contact with, in many cases continued to ask their advice. One of the main problems faced by branch managers is the balance between being a leader and being a banker. Several managers complained about not having enough time to pursue their leadership function sufficiently. This can partly be explained by the fact that they were appointed at a time when branch staffing was being cut drastically and, hence, managers had to be operating managers as well as leaders. One of the sales leaders in CB said:
I have worked here through many years, so you drag with you a whole lot of tasks which you cant get rid off My most important role is the leader role. It is obvious that is my most important role. But whether it is sufficiently attended to is another question.

Hence, branch managers appointed from the ranks had problems in performing their leadership function. It would therefore be fair to say that most of these managers needed some time before they would be able to perform their leadership role to their full potential. Changing themselves All the branch managers faced a difficult task in changing themselves before any other change could be carried out. But while the old managers had to change both their management style in the new working environment, and adopt to new banking tasks, the new managers were faced with changing only the latter since they obviously had no previous branch-management style to change. How swiftly managers can change themselves is clearly going to affect how quickly the organization can change. As one of the branch managers said:
You cant skip one step in the process. You are not turning on a switch when you work on values. So its a process that has started. But as a leader I will have to know what the bank stands for and what kind of culture they want me to bring forward, and I feel it has stopped there, I am not perfectly secure on that.

Thus it is difficult to lead a change effort if you are not completely secure in the direction and content of the change. Some of the managers described the process as follows:

I would say that from top management point of view there is morethey use the middle managers more. i.e. they work a lot on getting the middle-managers to identify as the leaders of SB. Theres a noticeable change there. It was first of all a process in me as an old professional banker it was a process in me that I suddenly should be active towards the customers and induce him to do things he hadnt asked for, i.e. selling my products to him. So I had to do something about my own attitudes, I spent a bit of time on that. And when I had clarified this with myself, I discovered that my colleagues were if possible even more frozen in the old reactive culture than what I was.

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Only when the managers have felt committed to and confident about the new direction, have efforts been made to alter the behaviour and attitudes of their subordinates. This is not to say though, that all branch managers were wholeheartedly in support of change. Some branch managers who did not support the new approach had left the bank. As one branch manager noted:
I know there are managers who havent been loyal to the decisions taken by top management, and they have disappeared after a while.

While not all the branch managers were comfortable with the new sales culture many understood that they had to promote the concept. One of the managers said:
You can say that there were no managers with any experience in sales It is mainly the same managers who are here today, and they have been through that process for better or worse. Some find it okay and some dont really like it. But then you havent really got any choice.

Whether employees did detect the less positive attitudes of some branch manager, and change efforts were consequently slowed down is not easily ascertained. First, few branch managers were openly critical concerning the actual sales approach. Some were not wholly comfortable with being sales people, but understood the need for the organization to move in that direction. Second, it is their behaviour towards the employees which matters, not whether they felt uncomfortable about it, although it might be argued that they would inevitably send out the wrong signals if they were reluctant managers. What is clear though, is that the banks have seen the importance of branch management and the need for this role to change if they are to be successful change agents. Furthermore, it seems evident that there is some difference between the banks in terms of how this problem has been approached. While CB seemed to have effectively changed their set of branch managers, SB has concentrated to a larger extent on changing the attitudes and behaviour of their existing branch managers. The methods of change The methods of change being utilized by the banks is a complex issue and there is the crucial question of who controls and carries out these activities. Information and consciousness building The role of the branch manager as the main source of communication both to and from branch employees has been briefly discussed. Information and thus

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building consciousness has been one of the main methods of conducting culture change in both banks. Two branch managers, commenting on the methods used in the change process, stated:
To illuminate the situation and then fine-tune ourselves. We havent got many carrots. There is a tiny bit of rewards.

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I am not really conscious about how I do it, but I am very aware about orientating, informing.

Two of the employees said:

I think that process, the process of rationalization has helped the bank on the way. Because there have been reductions in costs, and we have been told explicitly what they expect from us. And we have known that if we dont do it the bank wont get good enough results to keep us employed. It is that [threat] which has made us change. I think we more or less have been pressured into it because we have constantly been presented with negative results and seen that we have lost market shares to competitors.

The use of information then, has had several purposes. First, it is clear that the banking crisis and the rationalization processes that followed have created a whole new awareness among employees. A second important aspect of information and consciousness building, is the more active use of measurement and performance targets in todays banking industry. A number of sales results are reviewed on a weekly basis. These results are then discussed and feedback given, both from regional level to the branches and within the branch itself. There is no doubt that these measurement systems play an important part in changing the behaviour of employees. This is typically one of the methods used in step 1 of the culture change (see Figure 1). By measurement, the organization pressures the individual into changing their behaviour. Typically, this behaviour change is performed reluctantly, as it is colliding with the existing culture. The use of these information systems though, plays an important part in this first phase of the culture change process. The third vital part played by information in the culture change process, is in building up knowledge. Under the traditional regime employees tended only to respond to requests from their customers. However, to be a successful sales person, it is necessary to be knowledgable about products and to be constantly updated on the latest developments. This has created a situation where employees need for information and training has increased dramatically. Branch managers play an important role in their co-ordination of training. Reinforcing behaviour While information is mainly (but not solely) used in step 1 of the culture change process, reinforcement of the behaviour is step 2 of that process. Reinforcement is not a straightforward task. In order to reinforce the right behaviour, managers are dependent on information, both information of a strategic nature and knowledge of the actual behaviour. This dual set of information is in most

cases only held by branch managers, as acknowledged by Ireland (1992, p. 19)[1]:

Middle managers act as crossroads through which much of an organizations information travels. As such, they are uniquely provided with more abundant opportunities to understand and reinforce a firms culture.

Agents of change

Hence, branch managers with their knowledge of both the strategic direction and the actual behaviour of the employees in the marketplace are in the right position to reinforce the appropriate behaviour. Lower-level managers do, in many cases, not have the strategic insight to reinforce this behaviour and regional managers are too distant from the action to be able to provide swift reinforcement. It is also necessary to look at the type of reinforcement the banks were utilizing. It was shown earlier that the fear factor had been the major force in altering behaviour. However, in the longer term it may be necessary to build up a more positive system of reinforcement. If a change in culture as well as a change in behaviour is to be successfully achieved, the banks could be advised to have a reward system built up when the crisis ends and the environment stabilizes. It could be argued that the reward and reinforcement will merely stem from the fact that positive results are again achieved. This is, however, unlikely to be sufficient. First, the old reactive culture was not the main cause of the banking crisis. Thus, the proactive culture was introduced both as an answer to the crisis and to meet technological progress and reorganizations. It is clear that in the crisis situation of recent years, sales has been seen as the key to survival. When losses stabilize, this reasoning will arguably not be as powerful, hence the threat as a force for change will decrease in influence. Second, it is difficult to say whether the sales culture has developed sufficiently, during the crisis years, to be embedded. It is thus a major challenge for the banks to come up with a positive reward system if the culture change is to be completed successfully. Messages in relation to measurement The measurement systems are relatively new in the banking industry and have caused reactions, both positive and negative. Most employees felt that they were pressured into a new way of performing and in some cases they felt that this pressure worked against its aims. More worrying is the fact that the measurement systems had severe flaws. First, the only performance measure was sales, which meant that employees were rewarded only when they sold something new. Clearly they felt a conflict about how to spend their time given that most of them felt that they should spend time preserving and maintaining their old customer relationship thus making sure that the bank did not lose business. But as the measurement system did not reward this behaviour, staff felt that these activities were not valued highly. Second, in SB, staff could only notate a sale if the customer actually signed the forms when he was in the bank at the time. If, for example, one gave the customer an offer and he returned a

37

IJSIM 7,2

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week later to take it up, one would not be able to claim a sale. Most employees felt that this created a pushy atmosphere. The first of these flaws is particularly dangerous for the banks. If employees, through the measurement systems, have learned to give priority to new sales rather than preserving old customer relationships, the long-term results could be lost customers and profits. If Lovelock (1991) is correct that in general it is six times more expensive to acquire a new customer than to preserve an old one, this part of the measurement system appears very short-sighted. In such circumstances the branch managers have an important role in sending out the right signals. The individual measurements were solely subject to the branch managers discretion given his responsibility for the branchs performance. Some of the branch managers commenting on this situation said:
It hinges on what responsibility us managers take for keeping the old customers, and the messages we send out. I try to emphasize the old customers and dont give a xxxx about the measurement. I dont need to be best on measurement. We work hard on preserving the customers. And that has in many ways been the role since I got the job one and a half year ago, that it has to be more important to take care of the customers weve got rather than working towards getting new ones.

Two of the employees commented:

It all hinges on how your manager tackles the results and comments them. The way [the branch manager] does it, we dont feel it as pressure in that sense that he hangs us if we havent achieved our measurement objectives, because he doesnt.

As the branch manager is the person most employees regard as their symbolic leader, he has an important role to play in the messages he sends to his employees. It could be argued that it is not in the strategic interest for branch managers to work against the measurement systems, as this undermines the change effort. On the other hand it is clear that the measurement systems are not perfect and may themselves need to be revised. This example shows the residual power of the branch management despite the decline in formal power and status, in that they can mediate the instructions sent by higher level management. Teamwork One of the most important behavioural changes was the new emphasis on teamwork. The branches are no longer split into several sections with corporate advisers, private customer advisers, administration and cashiers, but consist of sales consultants and customer advisers. This has created the need for a whole new environment with regard to interpersonal relations at the branches. It was clear that this operationalization of the managers tasks had a large impact on the way teamwork was perceived among employees. The symbolic effect of the branch manager stepping down and performing alongside employees was

important in promoting the close co-operation and the social environment at the branch. It has been shown that branch managers are influential in the two steps of the culture change process, both changing and reinforcing behaviour. It was suggested that information is mainly used to change behaviour and in consciousness building. Branch managers, with their position as the main transmitter of information both ways are vital to this communication. Branch managers are furthermore the main internal reinforcer of behaviour. The banks had not built up any substantial positive reward system. Positive reinforcement thus came from the daily feedback and praise from branch managers. The need for such praise to be instant (Peters and Waterman, 1982) suggests that branch managers are uniquely suited to conduct such reinforcement. Tables III and IV sum up the activities applied in the two steps of the change efforts and the key force in terms of employee perceptions.
Method Measurement system Information Training Lead by example Key force Top management Branch management Branch management Branch management

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Table III. The activities in culture change step 1: changing behaviour

Method Praise Branch reward The sales activity The sales activity

Key force Branch management Top/regional management Customers Positive results Table IV. The activities in culture change step 2: reinforcing desired behaviour

Tables III and IV are an illustration of culture change. Thus it is for instance clear that information can be a factor in reinforcing behaviour as well as in changing it. However, the distinction between changing and reinforcing behaviour is made for the sake of simplifying the analysis. In reality, these steps can be interlinked. This is for example evident through positive feedback, which can contribute both in changing behaviour and in reinforcing it. This model built around employee perceptions in the organizations studied has, we believe, a wider validity. It contributes some insight into the culture change process by highlighting the fact that the sales activity in itself might be a force in the culture change process. Both customer feedback and positive results will give employees reinforcement for the desired behaviour. This further supports one of the points discussed earlier, namely that it is easier to change behaviour than it is to

IJSIM 7,2

change culture. As the model implies, reinforcement may to a large extent be dependent on external forces, and less within the power of the organization. Conclusion The main conclusion to be drawn from most texts on corporate culture change, is the need for strong leadership from the top. Without this leadership, the change process is thought to be extremely difficult, if not impossible. There is no evidence from the research to suggest that this view is wrong. In both the cases investigated, one or more leader at the top either the CEO or a head of division had made an initial effort to initiate the change. What was evident though, was that employees perceptions of such leadership were vague. This suggested that the performance of such leadership had to come from other managers at a lower level of the hierarchy. This research offered an analysis of the culture change as experienced by employees and their perceptions of the culture change activities. The study clearly revealed that branch managers were seen as the central figures in the culture change process. The branch managers role has shifted from being a distant operator to part of the team, performing leadership with the responsibility of creating results through the employees. While the leader role has lost some of its potential authority through the loss of status, the actual performance of leadership has increased, in this sense signifying leading the change effort. By strongly influencing the behaviour of employees and through the reinforcement of the desired behaviour, branch management guided the culture change process. It is also important to look at the formal organizational systems and procedures that were introduced in order to change employee behaviour. The most important changes here were the introduction of measurement systems with each employee having to record their sales on a weekly basis. However, such measurements were the subject of the branch managers discretion. Branch managers only reported the total sales effort of the branch to head office. This again meant that the branch manager had a key role in sending out the appropriate messages to employees in terms of how they should relate to the formal measurement system. We further discussed that the measurement systems had its obvious weaknesses as they emphasized the acquisition of new customers or sales rather than preserving old customer relationships. Branch managers had a significant role to play in decoding corporate messages to employees and indeed modifying and interpreting the centralized message. On the evidence of the above discussions, it seems clear that a reluctant set of branch managers could severely have interrupted the change process. As discussed earlier the large-scale reorganizations had seen a major reshuffle in terms of branch managers. It is likely that the new branch managers were appointed largely on their ability to lead the change effort and a positive attitude towards the proactive sales culture.

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Existing work on corporate culture and climate underestimate the role of middle managers. The picture presented is of top leaders introducing mission and vision statements, supported by systemic or structural change to reinforce the message, and that these impinge directly on staff, with middle managers being no more than a conduit. However, we would argue that top management actions are usually mediated by middle managers. While in some circumstances middle managers may whole-heartedly endorse the changes and this may reinforce the message to employees that this indeed is the accepted new way of doing things, it is also likely that in other circumstances middle managers mediate the message in such a manner as to change the message or to show their own negative perceptions of the messages. Given that it is these middle managers who are in daily interaction with employees it is their interpretation that is more likely to be hold sway. Hence both change in procedures (formal) and changes in values (informal) are likely to be mediated by middle managers. In our research, staff responded more to recognition via daily reinforcement by branch managers than to the formal reward system. The message sent from the top may appear quite different when put into practice on the ground. This does not always have negative consequences for service quality. Indeed we have notice that branch managers felt that the new management measurement systems did not place sufficient emphasis on preserving customer relationships and mediated the formal instructions. In environments such as banking and retailing where the middle manager is the only manager who sees staff on a daily basis (unlike for instance a large manufacturing plant) this middle management role is even more significant. Clearly more work needs to be done in examining this area. Furthermore, in a context where middle managers may be threatened by change, this makes them uncomfortable agents of change. This has implications for the many organizations seeking to manage change. The crisis created a context where all managers and employees understood that something had to be done. In many ways the collapse in existing assumptions made it possible to introduce new ones. Hence, the crisis created the possibility for change (Pettigrew, 1985). A crisis situation is seen as aiding radical change, in that one unlearns behaviour or in Lewins (1952) terms unfreezes the current behaviour. The banks had offered little positive reward for the desired behaviour. In the formalized system no substantial rewards were evident. This meant that the banks positive reward system rested more or less solely on branch managements recognition of employees. However, such a formal reward system may have to be established soon (Ogbonna, 1993; Schein, 1985). This is not just to maintain the sales culture of today, but also because it is likely that in the future the concept of proactive sales will be extended. One employee commenting on the future of his banking career, stated:
We have to get out in a role as pure salesmen. In five years we might not have a desk here anymore. We might have an office at home with a PC, a telephone, perhaps a fax machine, and we travel around to customers, selling and filling in borrowers certificates.

Agents of change

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IJSIM 7,2

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The research indicated that employees were far more hostile to such change than they were towards the changes that had already been carried out. Not only were such future reorganizations likely to lead to more upheaval, but there are also signs indicating that the industry crisis is about to end. This suggests that such deep-rooted changes will be more difficult to implement. However, conducting business today is very much about changing and being able to change (Hamel and Prahalad, 1991; McKenna, 1991). The sales culture might be only the first step of a long and continuous process of change. Technology and the possibilities created by it, produced uncertainty among employees. One manager acknowledged this problem and stated:
The point here is that we cannot hide from the fact that we have got the access to technology. And it is also a fact that we can produce the services, we can deal with the transactions substantially cheaper with the help of technology. The problem that arises is an explanation problem, that it will lead to job cuts. Ideally it should lead to employees saying Great, then we can use more time on the customer. But often it isnt like that.

The perceived lack of any clear strategies on what the future of employees work would be when customers no longer needed to visit the bank, may hinder the future change effort. Employees were worried about selling services that would eventually eliminate their job. Although management recognized the possibilities of this and saw the positive aspect in being able to concentrate more on sales, employees were left in a state of uncertainty. One branch though can serve as a small scale example on how management had reinforced the notion that successful sales did not eliminate work. One new product led directly to two persons losing their previous tasks. Instead of being made redundant, these two employees got new tasks within the sales organization. Such reinforcement may be important in proving that successful sales do not mean redundancies. Perhaps the communication of such strategies should be emphasized in the future in order to create an understanding of what banking will look like. When customers stop coming into the branches, the banks must reorganize their way of work to a much larger extent than what has been evident up to now. Whether this demands a new generation of employees who are willing to act as pure salesmen or not is another important question. The evidence from this research suggest that most employees would be against such a change. These are important questions for the banks to tackle if the early progress made in creating a sales-oriented culture is not to be wasted.
Note 1. Irelands article would probably define branch management as something in between middle- and first-level managers. Because of the structure of banks, where regional managers are removed from the daily actions, it seems appropriate in this context to treat branch managers as middle-level managers. References and further reading Boothe, W. and Kikta, J. (1989), Developing a sales culture: one banks success, Bankers Magazine, March-April, pp. 32-6.

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