How PARC Analysis can help assess problems in an organisation? – Part 2

PARC analysis framework is the pillar of Organisational Behaviour theory that organisations can use to diagnose and rectify their structural issues. Continuing on the previous post, here I present the analysis of the previous situation and through this, my goal would be to understand how the PARC principles could help us assess problems and issues in an organisation.

PARC Analysis

Architecture

Bigbank was a very hierarchical organisation with reporting lines that were nine to ten layers deep. The entire organisation was divided into business divisions such as Investment banking, capital markets, retail banking etc. that acted like individual silos. Each of these business lines, in turn, had support functions such as operations, technology, risk, legal etc. that were again siloed in their own Worlds. The technology division under Bill was divided along similar lines. Bill had about 10 direct reports, each of whom ran one of the technology divisions aligned to the business areas. In total, there were about 5,000 people who reported into Bill.

As one of the leading banks, Bigbank paid its employees handsomely. The compensation package consisted of a regular base salary and a year-end bonus. The bonuses varied substantially from individual to individual and were always kept a secret. Even individual base salaries differed at the same job level. Eventually, it all came down to the negotiating power an individual had, and more aggressive people won most of the times. Technology staff, who were by nature less likely to assertively negotiate, would often lose out to the more aggressive staff.

Routine:

The silos and strict hierarchies meant information flowed top down most of the times. Managers organised town halls for their employees once every couple of months through which they communicated the company’s strategies. Once in a while, larger town halls were organised by the senior management team where important changes were communicated. These town halls were very formal with limited scope to question and enquire.

Teams frequently worked with other teams and they were free to leverage each other’s expertise on major issues. However, the effectiveness was limited due to search costs of finding people with relevant skills in such a large institution. This resulted in teams re-inventing the wheel even though others might have solved the same problem before them.

A typical worker who was at a risk of getting laid off was about six rungs below Bill. Although they knew about the cost-cutting measures, they had no idea why some roles were identified as redundant and others not. This resulted in deep fissures between management and ordinary workers and left people bitter and demotivated. News about the redundancies filtered through ebbs and flows with the grapevine always buzzing with gossips and rumours.

Culture
Artefacts: Observed Behaviour

Being a bank, Bigbank was very focused on its bottom line. All the operations were to either earn more money or to optimise costs. People sat in identical cubicles and the setting was not very individualistic. One couldn’t distinguish the London offices from the Tokyo ones. People were discouraged from wearing anything informal, even on Fridays. The bank preferred orderliness and stressed how important it is for the image of the bank.

Feedback giving and receiving was always very awkward. There were 360° programmes but instead of being continuous processes, these were organised just once a year. There were very limited options to follow up on what needed to change based on these feedbacks. More importantly, instead of focusing on the strengths of a particular individual, the feedback process stressed on improving just the weaknesses.

Beliefs and Espoused Values

The bank was exceptionally multicultural with diversity one of the core aspects of the culture. However, very few programmes were instituted to take advantage of this diversity. The core goal was to be as client-centric as possible and all employees were required to go above and beyond to deliver an exceptional customer service.  The bank tried to be supportive to every employee, and there were quite a few initiatives to encourage talent and retain people. However, owing to its size, it was unable to provide such a support structure to everyone.

Ideas were encouraged and actively sought after but were not always taken to fruition. Egos and personality clashes often resulted in managers dropping initiatives midway through execution. This caused some frictions and feelings of being left out among people who were involved in such initiatives.

Assumptions

As the bank was recovering from the financial crisis, cost-cutting was at the core of the strategic long-term plan. Getting rid of the rich banker image was very important to the bank officials. Frugality ensured that some of the initiatives that created the culture of togetherness were getting squeezed.

Also, frequent changes in the company policies left people confused regarding the overall goal of the company and aided the flight of people to other organisations. A deep culture of “us vs them” existed between the frontline and technology employees. This resulted in multiple sub-cultures within the same organisation, which was making the life of managers like Bill more difficult day-by-day.

Recommendation:

Bill’s lightbulb moment was to make his organisation act as one. The train at Clapham Junction convinced him that he needed to make his employees feel part of the bigger train and not just selfish passengers.  He presented the following recommendations to Jonathan to stem the outward flow of people and to raise the morale of the workforce:

  1. Create a sense of Stability: Due to frequent changes, the bank was considered unstable by the employees. Articulating concrete strategic steps and presenting a set goal with timelines would create a perception of stability in the organisation.
  2. Relax the culture: Cultural rigidity taken to extremes stifles creativity and makes employees claustrophobic. To compete effectively for talent with the technology firms, the bank would need to relax the norms and let employees be more expressive.
  3. Quell misinformation: False information could be misleading for the employees and could create confusion. Creating a reliable communication channel to funnel relevant information would build trust and rapport among the employees. Giving alternative options to employees at risk would dispel some of the fear and would make them feel valued.
  4. Simplify the architecture: The wide chasm between the senior management and the employees creates lack of trust. Reducing the number of levels as part of the reorganisation and creating a flatter structure would make employees feel that they are closer to the management and create a sense of stability.
  5. Empower people to negotiate: The current compensation structure rewarded people who could bargain. Training people to understand their strengths and giving them tools to negotiate effectively would institute confidence in the system.
  6. Retain employees: Institute non-monetary incentives in addition to the monetary ones, to retain talent. Imitate perks at technology companies to attract and retain the technology employees, otherwise, there is a risk of losing them to the Googles of the World.
  7. Break down silos: The bank needs to integrate horizontally to break down the barriers. Getting people to talk more often to each other through inter-division events could save them from re-inventing the wheel every time.
  8. Build a coalition and break down “us vs them”: Work with partners from other divisions a make sure that the technologists feel part of the bigger team. Integrate the cultural differences and make sure that employees are treated with respect and dignity.
  9. Change cost optimisation policies: Redundancies shouldn’t be prioritised over operational efficiencies as a cost-cutting mechanism. There could be nothing worse than losing the people who make up the organisation. Making roles redundant instead of people show inadequate performance evaluation policies that create stress among the workers.
  10. Leverage the supportive culture: Restart the initiatives that encourage supportive culture. Starting mentorships, outreach and community programmes would bring people together and would make them feel included.
  11. Organise informal gatherings: Innovate to find better ways to meet and mix employees. Town halls can be a bit too formal for many employees to speak up. Instead, organise staff outing, picnics, time-outs etc. where people can express their opinions. Listen to these opinions and act on these.

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