Barclay was one of the leaders in the banking sphere. The company mainly provided services to large organizations and wealthy individual investors. It provided complete banking solutions. Barclays provided retail financial services (including retail banking and wealth management) and corporate banking. In 2000, it also entered the market of mortgage. At the end of the 1990s, it experienced significant issues.
Matt Barret who became the CEO of the company in 1999 identified a number of major issues. First, the company had to expand and earn certain share in the global market. Thus, 80% of Barclays’ profits were generated in the United Kingdom and the rest came from overseas subsidiaries. The company had to retain its status and increase its profits as it lost its leading position in the market. To achieve these aims, Barclays had to undergo significant structural changes that would include the change of the approach used.
At the same time, the major challenge was still associated with the internal issues the organization faced. The company’s employees did not understand the need for change and were reluctant to accept the change. The bank’s slow (and inefficient) expansion could also be explained by poor management and leadership especially when it came to cultural issues and diversity. The new CEO had a new vision and he created a new culture that had to be adopted by the employees. Adoption of the new culture required some time.
To understand the vision and culture developed by Barret and evaluate its effectiveness, it is necessary to consider certain external and internal environments of the company. First, it is important to note that the banking sector has always been highly competitive. The crisis of the 1980s was a significant challenge to all banks including the company in question. Major competitors of Barclays were ABN AMRO Bank, Credit Suisee, BNP Paribas, RBS and HSBC Holdings.
A brief SWOT analysis can help identify major challenges and ways that could be used to address them. As for strengths of the company, it is necessary to note that it was well-established and had a good reputation among its customers. The company was also characterized by a good international presence. This allowed to spread risk and address issues appearing in different markets and areas. Barclays was also associated with innovation and technological development. Thus, it was the first bank to introduce internet services. The bank had a solid structure that enabled it to operate properly.
When it comes to weaknesses, it is possible to mention significant costs. There were considerable bonuses for top management and the system of bonuses was rather unbalanced. Importantly, the company had no effective management system. The company’s employees were not making fact-based decisions and they did not focus on the value adding activities.
As for opportunities, it is possible to note that the company could benefit from effective expansion in the global market. Barclays had to develop a detailed and effective management plan that would enable the subsidiaries operate efficiently in different areas. Clearly, the culture of the company had to be shared by all employees of the organization.
As for threats, they were both internal and external. First, employees could be hostile to the new culture and could be reluctant to implement the changes that were crucial. This could undermine the effectiveness of the change and the company’s performance. As has been mentioned above, the banking market is highly competitive and there are high risks of new entries. More so, countries’ economies were trying to recover from financial constraints and there were various economic policies that could negatively affect the development of the company (or pose some threats to efficient operation).
In view of this brief analysis, it is possible to note that the major challenge Barclays faced was the lack of focus on value-adding activities, lack of initiative, reluctance to implement the change. The structure of the organization also needed certain changes, as there were far too many executives who had different views on the way the company should operate and develop.
To evaluate the effectiveness of the strategies Barrett used, it is necessary to pay certain attention to the stakeholders involved. It is clear that Barret was the key stakeholder as he was the major agent of the change. He had the most power and influence to implement the change. At the same time, the team of the executive committee could also be key stakeholders as they also had the necessary influence to implement the change. There were other key stakeholders involved. Those were advisors from Marakon. Those people trained employees of Barclays who learnt how to apply value-based approach.
As for primary stakeholders in the process of the change, those were employees of the company. The change would affect them, as they had to use a different approach when they made decisions. Importantly, they were the ones to accept the change and implement it. Secondary stakeholders were clients of the company who received better services.
In view of this, it is possible to assume that the strategy selected was very successful. Barrett chose to communicate with all the employees and top management to communicate his vision. Hence, he addressed major stakeholders involved. He wanted to make them understand the need for change. The way Barrett encouraged the team of the executive committee to work more efficiently and participate in the discussion more actively is remarkable.
This was quite an autocratic way to lead people, but it was the only way. Importantly, Barrett also addressed the issue concerning costs when he reshaped the bonus system making it more oriented on the company’s goals rather than executives’ goals.
Notably, meetings with all the employees were time- and effort-consuming but very effective as well. In this case, the new CEO was an inspirational leader who resorted to the democratic leadership style. Employees were encouraged to participate more effectively and come up with their own ideas on the development of the company.
It is also noteworthy that Barrett also created the team that helped him implement the change. It is always important to create a core team that shares the vision and is ready and eager to implement the change. Efficient work of this team contributed to the success of the company during that transitional period.
At the same time, it was possible to make leadership even more effective through development of more efficient communication strategies. Thus, apart from direct meetings with the stakeholders, it was important to develop a set of communication channels between different groups. Reporting and rating of successful projects or major outcomes for the company could motivate employees (including executives) to be more active. Development of working groups that would focus on implementation of the change at different levels could also be helpful.