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The recent and sudden collapse of one of America s best national and regional banks, Silicon Valley Bank ( SVB ) , sent shock waves
The recent and sudden collapse of one of Americas best national and regional banks, Silicon Valley Bank SVB sent shock waves across the globe. Indeed, even a mere few weeks before its failure it was named by Forbes as one of the best banks based on its impressive growth, credit quality and profitability Lai V and Le H It was only the second such large bank failure in US history. So what went wrong?
Firstly, there were suggestions that inefficient risk management, lack of depositor diversification and decline in investor confidence with attributing factors Lai V and Le H However, there were also a number of management and human resource planning issues that were also heavily cited as reasons in the mainstream media.
Former employees blamed a combination of remote work and a heavy focus on social issues for its collapse. While the banking industry generally encouraged or enforced a RTO full return to office postCOVID, SVB apparently did not. It had been reported that the continuation of hybrid work arrangements caused a lack of communication. People didnt collaborate, work didnt flow, and decisions werent made in a timely manner.
Employees noted that the management was spread across the country: CEO Greg Becker often worked from Hawaii, President Michael Descheneaux worked from Florida, Chief Risk Officer Laura Izurieta worked from a Washington suburb, and general counsel Mike Zuckert worked from New York Knox Employees were apparently similarly spread out.
Also cited as a reason for the collapse was the leaderships overemphasis on cultivating an empathetic culture that failed to prioritize risk management. I almost felt like I was at work on a college campus, another former executive said, recalling the compulsory watching of weekly TED talks on social issues Knox Additionally, other executives suggested an overemphasis on things that werent important and not enough on things that are.
The issue of overengineering came up as well, with employees blaming the financing of expensive consultants on much of the banks troubles. There was a heavy emphasis on contracting out decision making, even though the company employed extremely experienced senior executives.
For many, hybrid work is a godsend. For others, hybrid work can hurt culture, connection, and collaboration. The experience of SVB serves as a cautionary tale, emphasizing that while the hybrid work model holds promise, its not devoid of potential pitfalls Holeiciuc While some companies might not admit they have hybrid work issues, there is a growing pattern with large companies to revert back to preCOVID more traditional working structures.
For example, Disney, Starbucks, Twitter and KPMG have mandated more inperson days, limiting hybrid possibilities Holeiciuc We have also seen the massive media coverage of Elon Musks return to work or resign email to his employees at Tesla. However, a onesizefitsall approach can be detrimental, and organizations must tailor their strategies based on their unique operational needs, corporate culture, and employee dynamics.
As per the analysis of the case study what would be the answer to these questions
what was the role of hybrid work in the collapse of the company?
why do you believe this happened
In your capacity as the cheif executive officer, what would you have done to solve the problem?
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