Introduction

Tom Stewart, the Division Manager, argues that trust departments should be leading the banking industry's effort to implement relationship banking. Trust departments, he believes, have always been relationship oriented, by the very nature of their traditional activities. But despite being the resident practitioners of relationship banking, trust personnel must, according to Stewart, make fundamental changes if they are to compete in the financial services market.

The first required change is to develop customer- and market-driven attitudes to displace product-driven attitudes. Too many trust departments express the attitude 'Here is our investment style, take it or leave it.' That attitude must be replaced with one that begins with consultation with the customer to determine the customer's financial requirements as well as the customer's beliefs about money and wealth. This

initial consultation as the customer moves through the financial life cycle. At each stage of the life, the consultative relationship will identify financial needs appropriate to that point in the cycle and plans for the next stage.

The consultative relationship with customers takes on greater significance in the contemporary financial market because the traditional trust customers, large wealthy families with established trusts for future generations, no longer exist in large numbers. To survive, trust departments must continue to serve families and individuals with established wealth, but they must begin to focus on those who are in the wealth accumulation phase of their financial life cycle.

Initiating the Strategic and Organizational Changes

Tom Stewart indicates to the top management of PNB that the next several months would be spent in determining the current and future implications of market needs as a driving force on market scope, product scope, organizational structure, system and productions requirements, ales/distribution, and resource requirements or allocations. Stewart anticipates what the financial services industry will be like in the future and clarifies the vision and mission of the company.

The Strategic Planning Team

The first activity is the appointment of a strategic planning team. The team would include key managers or representatives from the functional groups of the division. The team would be the forum in which the elements of the strategic plan would be deliberated during the next few months.

The Task Forces

The second major activity is to set up several task forces to develop general strategies

around a limited number of key strategic issues. Seven task forces will be formed to

address the following seven strategic issues:

1. The emerging affluent market.

2. The wealth accumulator market

3. The wealth maintainer market

4. The institutional market

5. Human resources

6. Technology

7. Competition.

The first four issues referred to market segments that have distinctly different demographic profiles, sources of wealth, attitudes toward investments, and attitudes toward credit. Consequently, they have different needs for financial services and are appropriate bases for product differentiation. The human resources and technology task forces will be charged with responsibility for identifying the contribution of people and technology to the achievement of market-driven strategic objectives. Finally, the task force on competition is to examine the degree of competitiveness in

the industry and to monitor the strategic moves of the competitors. Although separate entities, the three task forces are expected to initiate and to respond to interactions with the four market task forces.

Inappropriate Organizational Structure

The current organizational structure does not always correspond to the needs of the market segments it is attempting to address. According to Stewart, to be truly market driven, the organizational structure should be molded to fit the marketing strategy, and not the reverse. The organizational structure must eventually be altered to meet the needs of the target market segments.

Inappropriate Organizational Culture

PNB's culture is becoming more heavily influenced by incentives, targets, performance standards, and management-by-objectives type systems. The key values of the culture should be risk-taking, cross-selling, accountability, technological literacy, and customer-oriented. PNB must be prepared for major changeschanges that involve people, organizational structure, systems and procedures, and culture.

Anticipating Implementation Issues

It has become clear that effective implementation of the market-driven strategy would involve extensive and intensive interdivisional cooperation and coordination. The intensive nature of required intergroup communication and coordination is apparent. Stewart has stated that "the changes in the organizational structure are intended to facilitate communicationwith our customers and among ourselvesand to enable us to execute our strategic plan."

Question 1

Tom Stewart uses teams and task forces to address various strategic issues when initiating organizational changes to make the Trust Division more customer- and market-oriented. Effective implementation of the market-driven strategy would involve extensive and intensive interdivisional cooperation and coordination. The intensive nature of required intergroup communication and coordination has become apparent.

If you were the Change Consultant, what would you educate Tom Stewart with regards to the dynamics of group behaviour and management of intergroup conflicts?

Question 2

According to Tom Stewart, the current organizational structure of PNB does not always correspond to the needs of the market segments it is attempting to address. To be truly market driven, the organizational structure must be changed to serve the target markets effectively. Discuss how or what changes can be made in the organizational structure so that the company can be more adaptive to the changing environment.

Question 3

Another planned change effort of PNB is the cultivation of a new culture to align with its strategic direction. PNB's culture is becoming more heavily influenced by incentives, targets, performance standards, and management-by-objectives type systems. The present culture of the company is deemed to be too rigid and ineffective for its strategic intent. Suggest a type of culture that is appropriate for a market-driven organization and how this culture can be cultivated and sustained.