Lloyds Banking Group Integration - Essay Example

?TABLE OF CONTENTS OPTIONS OF GROUP ORGANISATIONAL STRUCTURE AND CULTURAL ASPECTS 2 Hybrid Structure 2 Matrix Structure 4 IMPACT OF FACTORS ON ORGANISATION 5 Goal Congruence between Group and its Members 5 Relationship between Structure, Approach to Management and Culture and Performance 6 RECOMMENDATION 7 Bibliography 8 LLOYDS BANKING GROUP – INTEGRATION OPTIONS OF GROUP ORGANISATIONAL STRUCTURE AND CULTURAL ASPECTS Organisational structure is very important for the organisations because the failure of an organisation to select the best structure can hamper the proper functioning of the organisation. In this report, the different structure options for Lloyds Banking Group have been discussed. Moreover, based on the discussion and analysis, the best suitable structure has been recommended to the company. Hybrid Structure Lloyds Banking Group can adopt two kinds of hybrid structure. In the first type of hybrid structure company can combine the characteristics of both the functional and divisional structures. In this type of hybrid structure, Lloyds Group can organise its important functions into self-contained units by decentralising it whereas, the functions which require economies of scales and stability can be centralised. In the second type of hybrid structure, the company can combine the characteristics of functional, divisional and horizontal structures (Daft, 2009). Most of the multinational companies have hybrid structure. This structure is particularly useful for the organisations where the environment is highly uncertain and organisation can be best managed through divisional structure and some functional expertise is also required (Zamaros). This structure can offer great flexibility to Lloyds Bank. The following table describes the cultural dimensions (Gray & Larson, 2005) which could be affected by changing the organisational structure of Lloyds Group from Divisional structure to Hybrid structure. Cultural Dimensions in Hybrid Organisational Structure Cultural Dimensions Hybrid Organisational Structure – Lloyds Group Member Identity Lloyds Group could increase (in functions with divisional structure) or decrease (in functions with functional structure) the members identity if adopt this structure. Team Emphasis The culture of Lloyds Group could be improved by developing teams in the functions which involve teamwork tasks and by emphasising on individual tasks wherever important. Company has the flexibility to achieve a balance between individual work and teamwork. Inter-unit Relations The inter-unit relations of Lloyd Group could be improved if Lloyds Group go for divisional structure and could be reduced if Group goes for functional structure. Company has the flexibility to achieve the balance of coordination and interaction between units. Control The control of the supervisors to influence the behaviour of employees could be improved in the segments of business with functional structure. Company has the flexibility to achieve the balance of control. Social Distance Lloyds could improve its culture by reducing the social distance in the segments where company adopt divisional structure and enhance the social distance where company uses functional structure Reward Criteria The reward criteria could be defined by establishing seniority based and experience based priorities in functional structure and by establishing performance based criteria in divisional structure Conflict Tolerance Achieving the control tolerance balance across two kinds of structure (functional and divisional) could become a challenge for Lloyds Group Level of Effort The Group could enhance level of efforts of employees by increasing control through centralising some processes and decentralising others, based on particular needs Sharing Information Lloyds Group could control information sharing by using two kinds of structure External Orientation Lloyds Group could also become more flexible to respond to external orientations in a hybrid structure By adopting the hybrid structure, Lloyds Group could achieve various cultural benefits. First, this structure could allow the Group to adopt different structures for its different divisional units based on their needs. For example, if the insurance segment of the organisation needs more independence then Lloyds could pursue its divisional structure for its insurance division in which a more decentralised decision making style could be promoted. Second, the organisation is operating in a diverse culture with different kinds of financial products therefore; by adopting a hybrid structure managing diversification could also become easier for the Group. Matrix Structure Another structure which the group can adopt is the matrix structure. This structure combines the characteristics of functional and product structures, thereby, producing an efficient organisational structure. Rather than having a pyramid structure, a matrix structure will give Lloyds Group a two axes structure. By adopting this structure, the Group can adopt a lateral authority rather than vertical hierarchy which will reduce bureaucracy. Moreover, in this structure dual lines of responsibility, accountability and authority are involved which is against the “one boss” principle of management (Gorgens & Kusek, 2010, pp.61). The following table describes the cultural dimensions (Gray & Larson, 2005) which could be affected by changing the organisational structure of Lloyds Group from Divisional structure to Matrix structure. Cultural Dimensions in Matrix Organisational Structure Cultural Dimensions Matrix Organisational Structure – Lloyds Group Member Identity The identification of members could be improved if the Lloyds Group adopt this structure Team Emphasis The culture of Lloyds Group could be improved by organising the activities around the group in a matrix structure Inter-unit Relations The inter-unit relations of Lloyd Group could be improved, by enhancing the interaction between the units Control The control of the supervisors to influence the behaviour of employees could be improved of Lloyds Group have opted matrix structure. The dual lines of authority increase the control over employees Social Distance Lloyds could improve its culture by reducing the social distance in a matrix structure because of the lateral authority rather than hierarchical authority Reward Criteria Because of the decrease in hierarchical level of authority and increase in lateral authority, the reward criteria could be improved by making it performance based rather than seniority or non-performance factors based Conflict Tolerance In the matrix organisational structure of Lloyds Group, the conflict tolerance is low because the chances of conflicts are frequent Level of Effort The level of efforts in matrix organisational structure of Lloyds Group could be enhanced because employees are encouraged through teamwork, collaboration and control Sharing Information In matrix structure of Lloyds Group, information sharing is open because of the visible lines of authority External Orientation External orientation of Lloyds Group could be also improved in a matrix structure The culture of Lloyds Group can be improved through matrix structure because this structure increases the integration of different processes and functions of the organisation (Gray & Larson, 2005). It enhances the reaction time and improves time efficiency. In the matrix structure, the internal power struggles are reduced therefore, Lloyds Group could improve the control on the activities of the organisation. This structure could also allow the Group to promote a teamwork culture in the organisation. Although matrix structure appears to be very efficient for Lloyds Group however, this structure can negatively influence the culture of the organisation. This structure is complicated because of the dual lines of authority which violate the hierarchical authority system. The conflicts between the two managers can spoil the culture of the organisation. These conflicts can approach to more personal levels and the heated arguments of the managers can also influence the decisions of the organisation. Matrix structure can allow Lloyds Group to increase the control over various activities of the group however; technical quality of the organisation can be influenced because of the decreased control of the functional areas of the organisation. IMPACT OF FACTORS ON ORGANISATION Goal Congruence between Group and its Members Purpose of Lloyd Banking Group is to build deep and long-term relationships with the customers which may help them to get what is important to them. The vision of Lloyds Banking Group is to be known as the best financial services company (Lloyds Banking Group, 2011). Structure of an organisational plays a very significant role in enhancing the ability of organisation to achieve its mission and vision. Structure shapes and influences the culture of the organisation. Architecture and culture of an organisation typically deals with the manners in which the individuals in an organisation relate on day-to-day basis to another and other stakeholders of the company (Haberberg & Rieple, 2008, pp.323). The most suitable structure for Lloyd Group is the one which could develop a culture in which a significant compatibility exists between the goals and objectives of the organisation and the personal goals of the members of Lloyd Group. Haberberg & Rieple (2008) argue that an organisation can achieve goal congruence if it has well-designed control and reward systems. In a hybrid structure, Lloyd Group could face the problems in setting the criteria for reward systems because of the characteristics of two structures. For example, in the insurance segment of the Group, the performance based reward system could be more effective for the company to motivate the workers to attract and retain the customers. If Lloyds introduces performance based reward system in its unit with divisional structure and introduces experience based reward system in its unit with functional structure, conflicts can increase in the organisation. On the other hand, the flexibility to achieve varying levels of control across different units enhances the ability of Lloyds Group to achieve goal congruence more effectively. In the matrix structure, achieving the goal congruence between Lloyd Group and its members appear to be easier. It is because of the reason that reward system could be based on performance and competition rather than seniority and level of hierarchy. At the same time, from a positive perspective if Group manages dual lines of authority effectively, then an enhanced control as a result of dual lines of authority can also provide significant benefits to the organisation. Relationship between Structure, Approach to Management and Culture and Performance The interactions between the members of an organisation and their independent activities determine how an organisation works (Dransfield, pp.82). These interactions are directly influenced by the structure of the organisation and its culture. The structure of the Group can influence the culture and management of the organisation thereby, influencing the performance. Demonstrating a clear objective relationship between structure of an organisation and its performance is difficult because different structures can be successful in different situations and contexts (Chelladurai & Madella, 2006, pp.78). The research findings of Chandler’s thesis suggest that organisational structure follows strategy and when an organisation diversifies from offering a single product or service to many products and services thereby, pressuring the organisations to move from functional forms to multidivisional structures to achieve financial performance (Naoum, 2001, pp.111). The current divisional structure of Lloyd Group aims to offer simplified ways to the employees and customers (Lloyds Banking Group, 2011). With the current divisional structure organisation has been able to enjoy significant profitability. Therefore, if the structure of the organisation is changes, its culture will be influenced as a result of changes in management approaches. This change can influence the behaviour of employees thereby, affecting their productivity and efficiency. If Group changes the structure, the financial and operational performance of the Group will be affected. On the other hand, if structure of the organisation is not changed in consideration to the fact that Group is already enjoying profitability, then the changing environment and nature of competition in the industry can hamper the further growth and profitability of the organisation. RECOMMENDATION Based on the above discussion and analysis of the organisational structures and in consideration to the current divisional structure of the organisation, it is recommended to the organisation that matrix organisational structure is the most suitable structure for the Group. Out of the three forms of matrix structure including weak/functional matrix, balance/functional matrix and strong project matrix, no best structure implement could guarantee the success of the group because the purpose and function of organisation also play significant role. However, the changes in the cultural dimensions reflect in the matrix structure appear to be more favourable for the organisation. Matrix structure is suitable for Lloyd Group because the huge size of the Group and highly competitive and uncertain environment where using the characteristics of functional and product division characteristics will be very suitable for the Group. Bibliography Chelladurai, P. & Madella, A., 2006. Human Resource Management in Olympics Sport Organisations. Human Kinetics. USA. Daft, L. R., 2009. Organisation Theory and Design, Edition 10. Cengage Learning. USA. Dransfield, R., 2004. Business for Foundation Degrees and Higher Awards. Heinermann. UK. Gray, C. & Larson, E., 2005. Project Management, Edition 10. Tata Mc-Graw-Hill. India. Gorgens, M., & Kusek, Z. J., 2010. Making Monitoring and Evaluation Systems Work: A Capacity Toolkit, Edition 10. World Bank Publications. Haberberg, A. & Rieple, A., 2008. Strategic Management: Theory and Application, Edition 10. Oxford University Press. New York Lloyds Banking Group, n.d. Purpose and Vision. [Online] Available on: http://www.lloydsbankinggroup.com/about_us/company_overview/purpose_vision.asp [Accessed on 6 February 2011] Lloyds Banking Group, 2011. Our Structure. [Online] Available on: http://lloydsbankinggrouptalent.com/about-us/our-structure/default.aspx [Accessed on 7 February 2011] Naoum, S., 2001. People and Organisational Management in Construction. Thomas Telford. USA. Zamaros, n.d. Organisational Structure. [Online] Available on: http://www.zamaros.net/9.3%20Organizational%20Structure.pdf [Accessed on 5 February 2011] Read More