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Banks play an essential role in the economic growth and development of the countries, basically through the development and embracement of effective organizational management structure. This is because effective organizational management structure ensures that the human potential within the bank is utilized to the optimum (Burstiner, 2001). Human resources manager controls the human workforce within the organization in such a way that enables the Bank to attain its corporate goals and objectives. The success of a Bank is usually totally enriched on the effectiveness of the organization structure. Therefore, this underscores the importance of a well-structured organization structure in order for the bank to realize its corporate strategies.
This case study will involve a thorough analysis of the organizational challenges that have derailed the development efforts of Chase Bank. Organization challenges facing Chase Bank is actually the byproduct of environmental forces because no Bank principally operates in a vacuum. The management team in the Chase Bank has failed to spot the organizational issues, which has consequently turned to be a stern problem. These organizational challenges are multifaceted and include inability downsizing and organizational restructuring, utilization of self-managed teams and create a strong organizational culture (Burstiner, 2001).
This case study will enable the reader to understand the perspective of organizational issues that affect the normal management of business operations in the bank. It will also provide effective theoretical frameworks that will be essential in addressing these organizational issues. Theoretical frameworks to be analyzed in this case study will include the behavior, system management and scientific management theory.
Chase Bank traces its roots form the Bank of Manhattan, the bank that was founded on 1799 by Arron Burr. In 1955, Chase bank, which was previously owned by Canal bank, was bought by the Manhattan Bank (Chase Manhattan Bank, 1989). In 1996, Chase Manhattan bank was itself taken over by Chemical bank, which selected the Chase name. When the J. P. Morgan & Co. was created, it merged with Chase Manhattan Bank in the year 2000, and the new firm became JP Morgan Chase & company.
Chase Bank is currently the third largest financial institution in United States of America after the Bank of America and the Citigroup. It has assets with a net worth of $1.3 trillion. The bank has 6 divisions that are established worldwide with approximately 175,000 employees. The bank also has more than $172 billion in market capitalization. The Bank also operates the largest hedge fund in United States of America, with assets worth $34 billion. In the year 2006, the Bank had already earned $13 billion in revenues (Drucker, 2006).
Chase Bank organizational structure, strategy’s and culture has actually given it a competitive edge against it main competitors such as Bank of America and Citigroup. The Bank has successfully navigated through an intense capital and credit card markets, thus protecting and capitalizing on the market opportunities (Drucker, 2006). The Bank has an impressive leadership and organization structure, which enable the bank to sail through during tough financial times. The Bank business strategy is usually committed to building and developing a vibrant business community, preservation of the environment as well as promotion of inclusive organizational culture and behaviors, among its leadership team and entire employees.
The Bank strives to provide a fair and ethical business practices through setting of strong business principles that guide the employees actions especially when making informed decisions. This has helped the Bank to protect its working environment as well as its competitive edge in the market (Drucker, 2006).
Organizational behavior has been critical challenge that has threatened the economic objective of Chase Bank. The context and application of knowledge about the way various individual and groups within the Chase Bank has been lacking. In the recent past, the management team relationship with the entire organization has actually disrupted normal flow of business activities. The organization structure, which acts as a key pillar in management of flow of information as well as in decision making has proved to be inefficient in Chase Bank. This has made it difficult to establish a harmonious working condition since the organization structure tends to disregard the development of a harmonious relationship, which is normally attained through human, organizational and social objectives.
The management team has totally disregarded the idea that employees are usually willing to accept humane treatment, chance of feel wanted and appreciated and personal attention as part of the reward. In addition, Managers in Chase Bank have overlooked the need to apply mutual goal setting and problem solving approaches to their employees. Consequently, this has made it discouraged creativity and commitment in the bank working environment, a situation that reduces the Chase Bank employees overall contributions toward the achievement of corporate goals and objectives of the Bank.
Chase Bank way of managing change during business transition has been ineffective due to its organizational structure. It has actually made it difficult for employees to foster trust in the bank management due to lack of open and consistent communication criteria especially in decision making. Chase Bank management team needs to champion the establishment of organization structure that makes it easy for the management team to provide optimum levels of motivation in the Bank.
Developing an effective and efficient organizational structure need to be an imperious objective of the Chase Bank. This is because ineffective organizational structure usually restricts the employees work relationship that is essential in stimulation of a job productivity and employee satisfaction (Helms, 2000). A devolved organizational structure in the Bank enables the management team to identify and resolve any work related problem before it impact significantly to the corporate business operations. Open organization structure opens bridges the gap between the management team and the subordinate staffs in the organization. This paves way to the development of participative management efforts, which allows creation of wider opportunities for employees to comment and implement new business ideas in the workplace (Helms, 2000).
The Three Theories
In the banking industry, achievng maximum efficiency in business operation is something all banks strives to achieve in order to realize impressive business returns. However, this is only realized by those banks with effective and efficient organization behavior and management strategies (Miner, 2005). Management theories are derived from the perspective of successful and efficient businesses. Even though, most of the theoretical frameworks are normally hard to implement due to dynamic change in organizational structure, many features of these frameworks are practiced in many businesses around the globe. In this paper, three main management theories, which include behavioral, system and scientific management theories will be discussed in details (Miner, 2005).
Behavioral Management Theory
This theory states that organization management needs to be concerned with the working condition of the employees since it affects the employee’s quantity and quality of work. The theory recommends organization management team to invest more on application of social services ideologies in their respective business settings. According to Douglas McGregor, he recommends the concept of X and Y, which deals with conception that people do not like to work. Hence, they need to be guided to work towards the achievement of the organizational goals and objectives. This means than effective organizational structure need to be implemented in order to ensure that employees are adequately guided toward the achievement of the corporate goal (Miner, 2005). According to this theory, employees are usually motivated to perform better in their corporate responsibility especially when the organization structure is devised to provide rewards and working incentives.
The purpose of the behavioral management theory is to ensure that human relation in the work place is efficient to ensure that the employee motivation is maintained. This theory prompts the organization to address the employee’s satisfaction issues through implementation of organization structure and behavior that provides incentives and other benefits to employees (Miner, 2005).
System Management Theory
This theory deals with the organization as a group in connection to the operations that are geared towards the achievement of the organizational objectives. The theory normally functions in accordance to the design. The theory states that every organization is contained by an input and output. Therefore, an organization needs to take a close look at the organization structure which helps the organization to establish and realize the goals and objective of the organization (Miner, 2005). This means that, a company need to ensure that its organization structure and behavior is conducive enough to maintain a balance between the input and output. The system theory also puts into consideration the cultural interrelationship within an organization. This is because it is a cultural interaction that enables the organization leadership team to accommodate the individual personal attitudes that forms a complete social system in the workplace (Miner, 2005).
Scientific Management Theory
This theory states that labor pattern in an organization is not the main cause of business problems. It further states that only the organization management team that can provide solutions to the most business challenges through implementation of effective organization structure and behavior (Schoderbek, 2003). The theory points out that the combination of management and labor is essential in attainment of an organization benefit. Effective organization structure ensures that labor and management factors are well interlinked. In return, it leads to increased productivity, lowered production costs, elevated profits margins and an increase in employees’ wages as a result of increase in productivity. Scientific management theory usually employs a basic formula to methodical applications in management, which involves building up of knowledge, compatibility through group accomplishment, participation and advancement of employees, as well as achievement of high production (Schoderbek, 2003).
Problem Statement and Literature Support
Financial organizations are the most significant systems and the only practical vehicle for economic growth and change for any particular country. The Banking industry is figured as the hub of the financial organization because many financial transactions pass through the banks. The geographical and prevalence of the bank attached with the range and complexity of their services make the system an essential medium in everyday transaction. This is because the banking industry has been playing a crucial role as a growth initiator in an economy. In one way or another, a bank has the capacity to influence the lives of many lives every day and everywhere in the world.
Chase home mortgage branches operate autonomously of one another. This implies that, while there a supervision body, each outlet must conduct its day to day financial business on its own. This also means that some complications or issues accredited to certain chase financial managers and officers may not occur at other branches in other states this has led to chase bank experiencing some problems in its management (Chase Manhattan Bank, 1989).
Consumer Lawsuits and Contractual Violations
There have been some problems that if unobserved can lead to the crippling of chase bank activities. These issues can lead to the bank losing its esteemed customers or even face legal charges. In august 2009, Chase home mortgage as faced with a number of legal issues where its customers filed a case against them. These lawsuits came as a result of chase bank indiscriminately suspending Home Equity Line of Credit on its customers (New York, 2007). While these deferments were most likely connected to the credit predicament that had hit many banks in 2008, some clients with satisfactory standing and had no preceding credit hitches were affected severely. The most common thing about these complaints or lawsuits against Chase bank was contractual because the company has failed to honor its end of the bargain which is a loan agreement (Chase Manhattan Bank, 1980).
In the business world today, management theories attempt to answer the same questions which include, what is the best methodology to managing a business or a financial institution so as to exhaust the possibilities of getting more profits and reduce operational costs which in most cases bring losses to the financial institution. Occasionally, the management theories go through actual world testing so as to clear out the conceptions that are only popular in the present time. In this case, the lawsuits filed against chase bank can be said to fall under the contingency management theory. This theory has been described as a theory that deals or focuses on the legal issues, cultural considerations and the emerging fields of public management (Maciariello, 2008). This management theory tries to explain the process of the system by evaluating the aspects in a given state with human relations engagements because it addresses the human breadth of work.
Behavioral theorists supposed that a better considerate of human activities at work such as conflict, expectations improves productivity. This theory solves the problem of recording prevailing conditions, scrutinizing, recognizing the consequence of each act and choosing the best results. In the case of chase bank, the lawsuits filed can be best managed by the contingency theory of management (Miner, 2005). The bank is supposed to respond to these lawsuits and win them to justify their actions. This can help the bank in retaining its customer and putting some trust in them that the bank is not up to robbing off their hard earned money. Since this particular theory deals with the classification of applicable causes of action, chase bank will be in a position to prepare itself of a future occurrence on the same matter
The Changing Paradigm of Banking
Transformation or change is the only persistent factor in this vibrant world and financial transactions have not been an exception to these dynamics of change. The changes facing bankers relates to the way in which the current bunking is undergoing a rapid revolution in response to the forces of efficient operation and forces of completion productivity and liability management, risk management and globalized banking (Schoderbek, 2003). This has posed a challenge to Chase Bank in its endeavors of protecting the falling margins due to the increased impact of competition.
Another problem that Chase Bank faces is the use of technology. Innovation in the world wide revolution and technology in communication and information has been perceived to be a catalyst of productive growth in the banking industry. The relationship between information technology and banking for a long time has been known to be symbiotic. For chase bank, adapting new technology has not been a smooth journey. For chase bank the biggest problem has been to be in line with the emerging scenario that demands quick adoption of the new technology to provide state of the art services to its esteemed customers. Introduction of online banking, interconnected automatic teller machine has been a heavy investment made by the bank. With a well-established technology, Chase bank will be in a position to reap the benefits of reduced operating costs, customization of products and increased efficiency in discharging services to its customers (Helms, 2000).
There is an important need for Chase bank not to easy technology up gradation is the only crucial thing, but also its assimilation with an overall view of proper functioning of the bank to give it an edge in reverence of services delivered to enhancing the use of funds and construction up MIS for decision making. This upgrade of technology will also help in improving the management of liabilities, assets and risk presumed which normally have a direct influence on the balance sheet of Chase bank. In the entire world, technology has established a potential to changing the methods of selling, marketing, designing, pricing, and the delivery of financial products (Werhane, 2005).
The above changes call for a new, aggressive, more dynamic and challenging work culture to meet the customers demand, brand values, reputation, corporate governance and regulatory prescriptions. These upcoming problems thus call for an elaborate system management theory. This theory is remarkably applicable in the case of Chase bank. The theory involves the grouping of labor, technology and the entire management so as to attain a common benefit; that is maximization of profits. The theory uses a straightforward scientific formula in the management, participation, compatibility trough group accomplishment and achieving the highest production possible.
Chase bank is a bank that has gone through several changes in its history. Some of these changes include restructuring of the management, social-cultural changes and technological changes (Chase Manhattan Bank, 1989). All of these changes are geared towards the enhancement of service delivery to the customers. It has been operational from the 18th century and it has tremendously grown to be an international bank with many outlets. Today, Chase bank functions as an enormous financial service firm (Burstiner, 2001).
Management lesson or programs provides one with relevant skills and knowledge so as to assume leadership roles in the business world. The learner is equipped with managerial skill which enables one to hold managerial position in a company regardless of its size. Having managerial knowledge, one is able to rely on his or her opinion particularly when determining the appropriate model or theory to use in the management of a company or organization. Managerial skills also enable an individual to mobilize all factors of production such that there is the utilization of all resources available for the company. This can be significant in increasing the profit margins while at the same time enhancing team building (Hamermesh, 2000).
With managerial skills, an individual will be in a position to apply the principles of administration along with the most fundamental roles of a manager which include; unity of command, unity of direction, authority with responsibility, specialization of labor, remuneration of staff to boost their morale and finally subordination of individual interest to the general interest.
It is apparent that modern organizations and companies are strongly being influenced by the theories of management. Their teachings have become such a resilient part of modern administration that it is hard to believe that these theories were innovative and new at some point in history (Harvard business review, 2003)
Theorists who generate management theories depends reflection and mathematics in order to hypothesis a model for business actions. Management practice depends on case studies and the specific experiences of administrators when allocating with workplace situations. Since all schools of management have faults and benefits, business owners should study all management theories in order to improve profitability of the firm while at the same time reducing loses that the organization may accumulate in the course is operation (Miner, 2005).The present idea that these theories are common is strong compliment to the founder of these theories of management.