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A descriptive case study of BNP Paribas
BNP Paribas S.A. is a major global banking company that was formed way back in the year 2000 from a merger between Paribas and the Banque Nationale de Paris (BNP). It has two headquarters, a global one based in London and another in Paris. The merger was lauded for having reduced unhealthy competition and increased service delivery in the banking industry all over the world.
Its continuous successful performance and current policy status are attributed to the main objective of serving its retail end of the market while widening its investment base throughout the world. Through its leadership, it has been able to diversify its service and products portfolio to the consumers all over the globe making it to be ranked as a major bank in terms of provisions.
The same ranking in 2011 revealed that the measurement of its total assets was US$ 2.670 trillion. Despite the global crisis of 2007-2009, the bank was able to make massive profits of about €3 billion and €5.8 billion in 2008 and 2009 respectively.
Other sources also reveal that the bank has several interests in investment solutions, corporate and investment banking as well as retail banking as its strategic business units which have helped it rise above other market competitors in terms of performance. In addition, it has four domestic markets namely Luxemburg, Belgium, Italy and France. Its retail operations are found in almost all the continents of the world.
In terms of revolutionizing its operations, the management team at BNP Paribus has in the previous months focused on management of change as one of the most important aspects of enhancing its performance both at local and international levels. Management of change in leadership has given the bank an opportunity to improve its service delivery while focusing on the goal of raising overall profitability.
Surveys on the bank reveal that its leadership has embarked on the process of management of change especially in the area of management to enhance performance.
This company has been one of the leading banks in the provision of consumer financial services, investment banking, commercial banking and small scale businesses, processing financial transactions, private equity and assets management as shall be noted in its case study in relation to management of change.
Effective leadership at BNP Paribas has remained one of the most remarkable models that have brought out the much needed organizational change. This has been through the creation of favorable working environment, moderation of organizational operations and staff motivation that are all aimed at attaining organizational goals.
The leadership practice in this bank has continued to be outstanding in driving the organization towards change and linking its operations to long-term objectives. One would agree from past surveys that its leadership has indeed been the driving force for the much needed organizational change and is quite crucial in defining its effectiveness in terms asset management.
Needless to say, the ability by the management of the bank to spearhead positive change in the operations of the bank has been invaluable. It goes without saying that its regular positive change in leadership strategies has seen the organization thriving where others have fallen.
Since its inception, the management at BNP Paribas has been concerned with the need to foster change. Its leadership has been inherently value-based and has developed close ties with staff and stakeholders making it a group process. The enormous successes the bank has enjoyed are highly credited on leadership, change and professionalism employed at all levels of its operations.
This growth has been maintained through well founded change management strategies used in recruitment and selection of the different staff, shared values and systems, therefore serving as a major link between performance and practical skills.
Through its leadership, the bank has emphasized on the need to maintain high quality levels of services to employees and the diversification of products and services as core factors in maintaining a competitive advantage in the fast changing global market.
Emerging difficulties –leadership and management problems
Leadership issues
The report by the Worldwide Nicosia Business Review dated May 24, 2012 brings out one of the major issues facing BNP Paribas as leadership challenge. The bank has been blamed for using low-key leaders to run its operations in spite the fact that it has recorded significant growth in the past few years.
Nonetheless, it is imperative to note that some of the loopholes in its leadership structure may not yield immediate visible impacts but may take quite a considerable length of time before such effects are realized.
Even though its performance has been steady in the last few years, its leadership has never been able to competently effect necessary changes in terms of systems, building cohesion among its diverse workers and policies. The calls for change among its stakeholders could perhaps be the reason why there was an earlier than expected departure of its former leader Michael Pebereau.
His departure came after the realization that under his leadership as well as the market position of the company was not going to improve in the foreseeable future.
Ineffective teamwork and discrimination
The management approach that BNP Paribas has been using is based on diversity, a consideration which has seen it employ over 205,300 employees from 160 nationalities in the 84 countries where its offices are located. Even with its ambitions, commitment, creativity and responsiveness, its team of leadership has not been efficient in establishing strong working network.
One would sharply disagree with this argument on the basis that the bank has embraced corporate values and opted to work through groups to attain success. While that may be true, it still falls short of reflecting teamwork, a factor seen in its constant discrimination troubles featuring among its 30 operational risks.
Lack of team work is a critical challenge at BNP Paribas and might greatly affect the realization of its vision, objectives and long term goals. Teamwork is a critical component and a tool which the bank has not fully established and which when employed, can enhance performance and work success.
While its leadership understands the need to foster teamwork as a process of change and achieve established objectives, it has not been able to carry out its operations effectively due to issues of team dynamics.
Areas that need change
Structure
One of the areas that require immediate change interventions at BNP Paribas is its leadership structure. An effective leadership structure within BNP Paribas will improve the level of productivity by encouraging efficient and effective work. It is important to note that it is growing faster and becoming more complex.
As such, it endeavors to catch up with the growing complexity of market trends. Its leadership understands and acknowledges the fact that better and efficient provision of services is important towards growth. Using McKinsey 7s model, the structure of an organization which represents how units of an organization relate is critical in enhancing performance.
BNP Paribas organizational structure should comprise that which incorporates speed in decision making, increasing the flow of information in and out of the banking environment and offering mobility and value to all its workers.
One cannot doubt the effectiveness of leadership at BNP Paribas, but cannot also fail to admit that its leadership structure has not been keen on ensuring a top-down functional division, networking and organization of effective working systems.
As matter of fact, it is imperative to mention that for effective management of organizational resources including human capital demands good leadership roles within various departments of an organization. As it is the case with PNB Paribas at present, it is clearly evident that there are myriads of missing links in the leadership structure of the organization which ought to be addressed if positive growth is to be realized.
While the current leadership structure at BNP Paribas is decentralized and quite active, it should have a strong structure, as this will make it more competent and will form the organization’s greatest asset. Its leadership structure should represent how well the organization can execute its strategies.
There is need for a strong establishment of the existing leadership structure with competent leaders and the elimination of low key leaders. A poor leadership structure full of low-keyed leaders negatively impacts on organizational performance.
It is without doubt that the current management at BNP Paribas has a strenuous task of making sure that it maintains brilliant market performance while at the same time harmonizes its workforce in a manner that will boost the morale of employees. While balancing between the two extremes may be a cumbersome duty, it is worth to note that it can still be achieved by proper restructuring of leadership of various departments.
It is imperative for leaders at BNP Paribas to develop knowledge on leadership styles that will create change and curb the challenges posed by discriminatory practices. In order to strengthen the competitive position BNP Paribas has, proper and efficient leadership structures should be put in place.
Through changing and strengthening leadership structures, BNP Paribus will be able to establish new competitive structural abilities that will boost its global image. This will also see to it that its International participation via virtual management systems and modernization of the new branches in other countries contribute towards great success.
Its success requires high level and dynamic orientation of the management structures in order to overcome the stiff competition. Flexibility in the management of all the departments of the bank should be clear for international outlook and profits to be realized (Valentine 2012, p.41).
Strategy
Strategic leadership as a means of change remains one of the important ways through which BNP Paribas can remain progressive in terms of planning, performance and resource allocation, and be responsive to the market. Strategy, from the 7s model focuses on the allocation of resources which may be scarce and focusing on customers, competition and the business environment with a mission of reaching identified goals.
Being strategic at BNP Paribas leadership is critical in the management of change bearing in mind that it will act as a strong force that will continuously reenergize diverse workforce, refresh the informal and formal systems of the organization and propel it to a higher level.
Without strategic leadership, management of change and subsequent continuity in BNP Paribas, productivity and profitability will be an elusive practice. Indeed, in spite of the massive studies directed at re-evaluating management of change in the banking sector, without strategic leadership, banks fail to make great advances in implementing change. This scenario has been noted as a common case in the banking industry.
Having enjoyed a long period of continued profitability, the leadership of BNP Paribus should be aware of the need to restructure itself strategically as part and parcel of capturing diverse marketing opportunities and also counter emerging uncertainties. Therefore, there is need for it to have its strategies centered on a strong change process aimed at decentralizing its structures and creating newer units in its operations to accelerate growth.
In addition, this change process needs to involve all departments, encourage them to liaise with other structures and work together in enhancing service provision, relaying of feedbacks and re-evaluation of progress.
Skills and shared values
Skills are distinctive capabilities which individuals or personnel in an organization possess at their disposal. On the other hand, shared values are attitudes and central beliefs the aforementioned members of an organization have. The development of skills among workers in BNP Paribas plays a crucial role of elevating performance levels to a position whereby an organization enjoys profitability.
This practice of developing human capital is an attribute of strategic leadership. Implementing change in terms of developing skills among staff has been a model that has brought immense benefit to the business. At BNP Paribus, human capital is an integral factor which has continually boosted the capability and overall performance.
In order to improve its output and limit low-key staff, the top leadership of this bank ought to organize training to enhance workers’ skills. Trained and adequately skilled workers will form the bank’s capital resource and will also be a source of gaining a competitive edge. Forming of development and training programs are some of the best strategies of developing human capital.
This management of change model targets constructing a vision that is common to a firm will facilitate communication and helps in building skills. Besides, skill development programs will be critical in inculcating core values, enhancing social levels and promoting cohesion among the workforce.
Staff and style
Successful changes usually pick intensity and speed as they progress through different stages in the change process. BNP Paribas’ leaders must account for the new behavior and cultural development in the institution by nurturing the tender change and avoiding identity crisis for different employees. Special cases must be addressed in the bank for slow learners to avoid drifting behind due to their inefficiency.
Increased credibility of the employees and structures is therefore built on to anchor the change progress after establishing the short term win situations.Policies that do not cohere with the change process should either modified or dropped completely in order to maintain the direction of the vision.
Assessment at this stage will be necessary to make sure that the overall services delivery and the expected results are attained alongside the short term individual attainment.
Systems
System in PNB Paribas is a critical component that encompasses routines, processes, and procedures an organization has. Its leaders must be in a position to align all the systems of an organization to meet organizational goals.
At BNP Paribas, its leadership needs to characterize its systems to reflect the importance of managing assets, information systems, performance appraisal systems, promotion, hiring and financial systems for better performance.
Some of the areas that were changed
It is imperative to note that the leadership in BNP Paribas has been able to effect certain changes in areas of its operation. Notably, its profitability has been based on the ability to factor leadership changes in prevailing internal and external situations and infusing its mission with articulate objectivity of improved performance and high profitability.
In light of staffing, skills and shared values, it has set up mechanisms for training, development, recruitment and employee selections based on critical outlook of the prevailing conditions and the balance between implications of the program’s effects to the employees. A sense of stability and decisiveness that focuses on the employees to a better future has been generated as a tool for maintaining commitment and hard work.
Questions
- What is the function of leadership in creating and managing change?
- Should the leadership of an organization involve change agents to implement organizational change?
- What impact has workers, staff and stakeholders in effecting change?
- Analyze the management of change using various theories.
Main learning points
One of the key learning points from the case study is that management of change in organizations remains to be a core practice that cannot be ignored if positive growth and performance is to be realized. In addition, the ability to manage change especially in regards to leadership within an organization stands out as an integral need in the banking industry.
As noted in the case of PNB Paribas, low key leadership is a factor that has seen its growth slowdown compared to its former years. Thus, a sustainable growth and performance of an organization will largely depend on how well change is introduced, embraced and implemented within an organization.
Another factor that has come out from the case study is that the role of strategic leadership in creating change sprouts from various driving forces which compel an organization to seek intrinsic outsets for improvements.
This reflects the perspective which Albanese (2012, p. 13) holds in his article when quoting the change management model by Kurt Lewin’s and indicating that leadership must be flexible and anchored on a strong force to facilitate re-evaluation and acceptance and implementation of the ideology. This can also be implemented when both internal and external orientations of strategic leadership are considered.
A further learning point from the case study mirrors, Cohen’s (2002 p. 53) sentiment from the model of organization change. He indicates that there is need for management of an organization to develop a desire for change before shifting to seek change in an organization.
Under this model and with regards to the case study, it becomes clear that a leadership must be able to consider an organization’s internal and external factors and move towards implementing them. Besides, it reflects the connection that exists between strategic leadership, change management and innovation.
Answers and discussions to questions on the case study
What is the role of leadership in creating and managing change?
Leadership according to Bielski (2005, p. 57) plays a critical role of providing direction, vision and opportunity for organizational change. It achieves this by evaluating performance of various departments and systems within an organization.
In agreement, Toegel and Barsoux (2012, p. 55) indicate that leaders must become aware of change and the need to create it at any given time during the lifetime of an organization. This should be carefully articulated by being actively involved in the change process.
Should the leadership of an organization involve change agents to implement organizational change?
Clark (2012, p. 1) points out that for an effective change to take place in an organization, all stakeholders, workers and departmental leaders in an organization must be included in defining change and its application.
While change as noted in the case study is a crucial aspect which BNP Paribus needs.to improve its leadership and business operations, Hernandez-Lopez (2003, p. 180) is of the view that it should enhance involvement of all entities as agents of change.
Hernandez-Lopez (2003, p. 180) continues to point out that in banking institutions, the changing and highly dynamic trends of various operations call for involvement of all workers as change agents for greater efficiencies in services delivery and asset management.
This concurs with the view held by most management scholars who indicate that the participation of all entities as change agents is crucial in introducing fresh ideas and practices in leadership and organization management (Palmer, Dunford & Akin 2009, p. 57).
Kurt Lewin’s model of refreezing and freezing augments this consideration and presents all organizations including BNP Paribas as having enough potential for innovation, strategic leadership and change either to address their negative considerations or further enhance their positive outcomes.
What impact has workers, staff and stakeholders in effecting change?
Clark (2012, p. 1) is of the view that the staff, workers and stakeholders of an organization are critical entities of change management in the sense that they create the necessary forces for articulating an organization’s ideals in the market.
Human resources management best practices theory as exemplified by Dave Ulrich seeks to create an intrinsic outset in the management of labor towards pre-established goals. Clark (2012, p. 1) and Streeter (2003, p. 60) therefore consider the implementation of these applications in an organization to have two key change implications that greatly count in staffing.
Discuss some of the theories reflecting management of change in an organization
Organization change theory
Analysts are increasingly in agreement that one of the most important and inevitable concept in an organization is change management. In his theory of organization change, Kurt Lewin presents the model of freezing and refreezing in facilitating identity and acceptance of new systems.
In their review of the theory, Janicijevic (2010, p. 98) and Hopkins (2009, p. 28) indicate that for an organization to realize its objectives, it needs to ensure that change is effectively articulated in areas or departments that are not performing.
Janicijevic (2010, p. 98) and Hopkins (2009, p. 28) further indicate organizational change must be viewed as a point of raising an organization to its next level. Besides, they emphasize on the need to effect change by adhering to the established culture in an organization.
Contingency theory
This theory as Cohen (2002 p. 53) indicates advocates for diversity in managing organizations. Therefore, as majority of bank managers argue, the theory calls for analytical outset in making key decisions for guiding an organization. In view of the theory, human resource managers should be able to respond to internal and external forces through effective leadership practices (Jenkins, 2012).
This view concurs with the argument posed by Johnson (2002, p. 8) that though organizations have their own pre-established standards in management; they should avoid rigidity by seeking a leadership that is flexible and accommodates new objectives and dynamic standards. This consideration is further echoed by Hopkins (2009, p. 28) who indicates that contingent change factors are especially very crucial in leadership practices.
In recap, it is imperative to mention that management of change in organizations remains as a core practice that cannot be ignored if positive growth and performance is to be realized. In addition, the ability to manage change especially in regards to human resource development within an organization stands out as an integral need in the banking industry.
In the case of PNB Paribas, the sustainable growth and performance of the organization will largely depend on how well change I introduced, embraced and implemented within the organization. This will be the only way through which effective leadership will translate to positive growth of the organization bearing in mind that the market competition in the banking industry is quite dynamic.
References
Albanese, C 2012, ‘Spotlight on Carl James, BNP Paribas Investment Partners’, FX Week, vol.12 no.4, pp. 12-13.
Bielski, L 2005, ‘Getting “front and center” on security policies’, American Bankers Association. ABA Banking Journal vol. 97 no. 3, pp. 57-59.
Clark, J 2012, ‘BNP Paribas rolls out single-dealer e-FX platform’, FX Week, vol. 12 no. 2, pp. 1-2.
Cohen, D 2002, ‘Making change effective’, American Bankers Association. ABA Banking Journal vol. 94 no. 12, pp. 53-55.
Hernandez-Lopez , E 2003 ‘Bag wars and bank wars, the Gucci and Banque National de Paris hostile bids: European corporate culture responds to active shareholders’, Fordham Journal of Corporate & Financial Law vol. 9 no. 1, pp.127-190.
Hopkins, M 2009, ‘8 Reasons Sustainability Will Change Management (That You Never Thought of)’, MIT Sloan Management Review vol. 51 no. 1, pp. 27-30.
Janicijevic, N 2010, ‘Business processes in organizational diagnosis’, Management : Journal of Contemporary Management Issues vol. 15 no. 2, pp. 85-106.
Jenkins, P 2012, Low-key leaders may unlock new problems for banks,
Johnson, L 2002, ‘Issue selling in the organization’ MIT Sloan Management Review vol. 43 no. 3, pp. 8-9.
Palmer I, Dunford R & Akin G 2009, Managing Organizational Change A Multiple Perspective Approach, McGraw Hill, Boston.
Streeter, B 2003, ‘Sweet deal’, American Bankers Association. ABA Banking Journal vol. 95 no. 11, pp. 69-74.
Toegel, G & Barsoux, J 2012, ‘How to become a better leader’. MIT Sloan Management Review vol.53 no. 3, pp. 51-60.
Valentine, L 2012, ‘Wealth management: revenue solution? American Bankers Association. ABA Banking Journal vol.104 no. 3, pp. 40-44.
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