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Agents of change?Bank branch managers and the

management of corporate culture changeBjorn Brubakk and Adrian Wilkinson

Manchester School of Management, Manchester, UK

IntroductionCorporate culture has had an increasing impact on the way both theorists andpractitioners understand the processes in and the management oforganizations. During recent years there has been an undisputed increase inboth managerial and theoretical interest in the field of corporate culture(Watson, 1994; Willmott, 1993). This interest is not attributable to one singlefactor, but a concern with new and improved ways of managing for success hasbeen a central theme. Ogbonna and Wilkinson (1988, p. 10) suggest that the keyfactors are: “the dysfunctions and costs of traditional bureaucracies”, and “therise in importance of personal services in many industries”. Despite this interestthough, it is still difficult to find industry-dependent analysis which provides acontextual account of corporate culture change. This article will analyse suchprocesses by looking at the financial services sector in Norway.

Corporate culture literatureCorporate culture is a somewhat ambiguous concept, difficult to define andperhaps even more so to understand. Schein’s (1985, p. 9) definition encompassesthe most important aspects of culture by defining it as:

A pattern of basic assumptions – invented, discovered, or developed by a given group as itlearns to cope with its problems of external adaptation and internal integration – that hasworked well enough to be considered valid and, therefore, to be taught to new members as thecorrect way to perceive, think, and feel in relation to those problems.

Corporate culture then, is not easily observable, and it is not the same as thebehaviour one can observe when studying organizations. It can be seen asexisting on several levels, with different features attached to each level. Huseand Cummings (1985), Schein (1985) and Kotter and Heskett (1992) all offerclassifications of these levels, although both the number of levels (four, threeand two respectively), and the classification differs slightly (see Figure 1). Thebasic idea is that corporate culture’s deeper levels, the basic assumptions andthe values, what Schein (1985) calls the “essence of culture”, exist on an invisiblelevel. These assumptions and values are seen as extremely difficult to change,and any change in these assumptions represents a long-term effort by theorganization. On the other hand, we have what Kotter and Heskett (1992) termthe “group behaviour norms”, and Schein (1985) and Huse and Cummings(1985) call the “cultural artifacts”. These are typically easier to change and

International Journal of ServiceIndustry Management, Vol. 7 No. 2,1996, pp. 21-43. © MCB University

Press, 0956-4233

Submitted July 1995Revised October 1995

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easier to observe, and are the manifestations of culture. Behaviour, according toSchein (1985) can be either a cultural artefact or it can be a reflection of theenvironment.

There are two important implications arising from this. First, behaviour inorganizations does not necessarily reflect the culture. In times of environmentalchange, it is probable that the behaviour will be a reflection of the environmentrather than a cultural artefact. Second, cultures are not simply an internalmanagement variable, they are subject to influence from the externalenvironment (see Figure 2).

It is also important to take account of the concept of subcultures. As Morgan(1986, pp. 126-7) observes:

Culture is not something that is imposed on a social setting. Rather, it develops during thecourse of social interaction. In organizations there are often many different and competingvalue systems that create a mosaic of organizational realities rather than a uniform corporateculture.

Such subcultures may offer small or large variations on the corporate culture.Individuals or groups within units of the organization may promote different oradditional values inside their unit (Young, 1989).

In recent years managing culture change has become one of the mostdebated aspects of management literature. Because organizations are facedwith an environment where change is almost a part of the daily routine,organizations must adapt to and change accordingly. Probably the mostdifficult, most risky, and most disrupting change of all, is change in corporateculture. Huse and Cummings (1985) suggest that organizations should always

Figure 1.Levels of culture

Basicassumptions

Values

Norms

Artefacts

Source: Huse and Cummings (1985, p. 422), (Reproduced by kind permissionof West Educational Publishing)

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try other solutions before attempting cultural changes. Kotter and Heskett(1992) argue that the difficulties involved in managing these processes isunderestimated. Not only are such changes disruptive to the organizationalprocesses and procedures, they are also deeply disruptive to the individualmembers of the organization. This is not to say though, that culture changesshould not be attempted or that they are impossible to achieve. Both Kotterand Heskett (1992) and Nakajo and Kono (1989) offer evidence oforganizations where corporate cultures have been successfully changed tobecome more performance enhancing.

The role played by leaders is an integral part of most texts on culture andchange. Kotter and Heskett (1992), Peters and Waterman (1982), Nakajo andKono (1989) and Schein (1985) all devote time and space to describing the role ofthe person or the persons that assert such a profound influence on the creationand maintenance of the corporate culture. Leaders have been found to play aninstrumental role in guiding the organization through cultural change, as wellas other organizational change processes (Huse and Cummings, 1985). Kotterand Heskett (1992, p. 92) believe that:

Leadership from one or two people at the very top of an organization seems to be an absoluteessential ingredient when major cultural change occurs.

Moreover this process has to come from the top, because to change cultures oneneeds power at a level only found at the top of organizations, and usually the

Figure 2.Organizational

behaviour and culture

Reflecting environment

Behaviour

Cultural artefacts

The operating environment

Corporate culture

Source: Schein (1985)

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scope of change is of a magnitude that the only individuals in a position tochange it is the top management.

The work of Scheider and Bowen (1993) on organizational climate is alsorelevant to this research. They have emphasized the distinctiveness of theservice environment and the importance of the employee – customer front-lineinterface for the service experience. Schneider and Bowen point out that “thereis not a supervisor physically present in the employee-customer dyad who canexercise ongoing immediate quality control” (quoted by Grönroos, 1990 p. 269).Given this it is argued that management need to create an appropriate climatewhich is conducive to good quality service. Such a climate includes bothpractices and procedures which facilitate such service, and managementreward and support for providing this service. Hence there is both formalsupport (e.g. systems) and informal (e.g. people relationships and values).However, Schneider and Bowen tend to take a top-down view of such a strategyand have little to say on the role of the branch manager.

Similarly, middle managers and supervisors receive little attention in thecorporate culture literature. However, according to Kotter and Heskett (1992, p. 93), middle managers play an important part in major culture change,although they are not seen as being able to initiate such changes. They writethat:

Ultimately, it is their actions that produce the changes.

The researchIn our research in the financial sector it is clear that the whole process ofconducting banking is changing. Branches are becoming more concerned withsales and as the whole way of business changes, so does the behaviouralpatterns of the employees. As Boothe and Kitka (1989, p. 32) observed:

The commercial banking industry now more than at any other time in its history is directlyconfronted with a fundamental issue – survival. Faced with further deregulation, continuedcompetition from other financial service organizations, and rapid and unexpected change,commercial banks can no longer be just financially oriented; they must be customer, sales andservice oriented. They can no longer sit back and expect customers, retail or commercial, tocome to them. They must seek out quality consumer and corporate business and establishmeaningful multiproduct relationships. In short, bankers must become marketers andsalespeople; they must redefine how they do business.

Developments in the sector and (Cressey and Scott, 1992; Metzer, 1990;Wilkinson, 1995) suggest that leadership and strategic responsibility shouldbe an inherent part of middle-management jobs. In fact, few sectors will havethe potential to create subcultures and strong lower-level “leaders”, in thesame way as the banking sector because of the fragmented structure ofbranches, and the influence a branch manager has on his subordinates. Theyare in most cases the highest ranking manager at the site and the highestranking manager interacting daily with employees. Unlike in themanufacturing sector where senior managers are on the same site as middle

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managers and can therefore provide a visible leadership presence, in bankingthe middle manager or branch manager tends to stand in “splendid isolation”.Branch management’s role and influence on corporate culture change is thusthe central point in this paper.

The method chosen for this research was a qualitative case study approach.As the main objective of the research was to investigate corporate culturechange, the contextualist framework of Pettigrew (1985; 1990) was utilized.Pettigrew (1990, p. 267) argued that:

Theoretically sound and practically useful research on strategic decision-making and changeshould involve the continuous interplay among ideas about the context of change, the processof change and the content of change, together with skill in regulating the relations among thethree.

Pettigrew (1985, p. 228) suggests that one of the key features of such an analysisis to:

Understand the emergent situation and holistic features of an organization or a process in itscontext, rather than divide the world into limited sets of dependent and independent variablesisolated from their context.

The research was conducted in two phases. A pilot study was conducted at thebeginning of 1993 and included one branch from each of the two banks chosenfor the research. The remaining ten branches were researched in the main studyin the summer of 1993. In total 75 people were interviewed, 40 in one of thebanks and 35 in the other.

Case one: Commercial BankCommercial Bank (CB) bank is Norway’s largest commercial bank both in termsof total assets and branch outlets. It is the result of a merger between two majorcommercial banks in the late 1980s. The merger process has been deemed asuccess, with the achievement of a breakdown of cultural differences.

The bank had a difficult start, and had at the time of the research notdelivered a profit. Losses were high and have meant that the bank lost close toall its share capital and is in business today due to agreements with theGovernment Bank Insurance Fund. CB covers the whole Norwegian market.Each region comprises, a regional centre and outlets varying from seven to 45branches. In the new sales oriented organization, the regional centres functionas the administrative base, carrying out many of the tasks previouslyperformed by the branches. In 1992, branches were renamed sales offices andbranch managers sales leaders. “Branches” are now evaluated in terms of salesof products such as cash point cards, and loan and deposit volumedevelopment.

In the process of becoming a sales organization, two other aspects areimportant: centralization and standardization. In Norway, unlike the UK, ithardly matters in which branch one’s account is opened, as the same level ofservice and the same services are available in all retail outlets. CB is attemptingto create a streamlined bank, where retail outlets all over the country are as

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similar as possible. Through moving administrative work and work with non-performing loans to a regional centre, and through splitting the retail bankingdivision from the commercial banking division, the earlier full-scale servicebranches have seen tasks and workforce cut dramatically. The consequence ofthese changes to branches and branch management will be a main theme in thispaper. It is clear that the role of branch management in CB is one marked bychange and where both responsibilities and tasks have been alteredsignificantly.

Case 2: Savings Bank“Savings Bank” (SB) is Norway’s largest savings bank, having a market sharewithin this segment equalling that of its four largest competitors ( Johanson,1993, p. 46). The objective of the bank, as summed up in the Annual Report(1992, p. 1) is:

To constitute the best banking alternative for private customers and small and medium-sizedcompanies in its market area, which is primarily Eastern Norway.

Although the primary market is Eastern Norway, the bank has via districtoffices a nationwide coverage. SB is a new bank, the result of a merger betweenfive of the major savings banks in 1990. The bank has changed its businessphilosophy, introducing concepts such as segmentation and sales in order toserve the customer base in a more effective and customer oriented manner. Thestrategy of SB differs from the one chosen by CB in that the former has chosena more decentralized way of operating. In the 1992 Annual Report (p. 1) it isstated that:

A decentralised organization with delegated decision making power and a high level ofexpertise in the local branches provides proximity to the markets. Our objective is to work tomake the term “neighbourhood bank” a reality.

This objective of being the “neighbourhood bank” relates to the bank’s strategyof being “close to the customer”, hence operating through a high number ofoutlets (179 in the eastern part of Norway at the end of 1992 (Annual Report1992, pp. 54-62)). Second, historical factors play an important part. Prior to themerger, most of the district and regional savings banks that merged intosavings bank had been through extensive processes of merging themselves.These savings banks have traditionally been integral parts of their localsettlements. Municipalities and private customers have been closely interlinkedwith “their” bank. Hence the strategy of being the neighbourhood bank is onewhich is not only based on strategic considerations it is also one deeply rootedin the history of the banks.

Background to the research findingsBefore discussing our key findings it is necessary to examine some contextualissues related to culture change, including a framework for viewing culture

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change and a closer examination of the content of the changes made by the twobanks. A starting point is managers’ perception of the changes:

What’s important … is that behaviour changes. We can forget attitude, because it is actionand behaviour which is important … Poor behaviour and good behaviour is to be punished orrewarded. You can’t punish or reward good or bad attitude.

I feel it is up to the individual to recognize the possibilities that the employer creates. You arethe only person who can change your values. You have to accept the possibilities, or else you’llfall behind. I don’t believe in anyone changing my values … Attitudes is one thing, but it isthe personal behaviour that will have to be changed. To learn to do something different.

Thus these managers did not believe in changing the values or attitudes of theiremployees. Rather they demanded a new pattern of behaviour. This wasfurther highlighted by one of these managers who commented on how far suchconcepts had to be forced on employees:

There must be somebody who keeps it up, and we do that through weekly sales-meetings,keeping it rolling. And when the behaviour is of a kind where it is the goal and the wish forevery individual to sell, that’s what it is all about. You get much more self-driven, everyone willhave to become that, in relation to your own goals and budgets. You have acceptedresponsibility.

Hence by highlighting the importance of changing behaviour and byreinforcing this behaviour they believed employees would gradually come toterms with the new demands and change their values and assumptions. Itshould be emphasized that not all the branch managers took this stance. Somebranch managers talked about changing employees values and attitudesdirectly. One can see culture change as a process where managers first makeemployee’s behaviour change and then reinforce the desired behaviour. Thistakes the form of a learning process.

These ideas provide us with a framework for culture change, making itpossible to isolate two steps in that process. This is not to say that these twosteps are in reality separated, but by separating the process into these steps, weare better able to conceptualize managerial activities as part of the culturechange process. Thus, Figure 3 is a framework for viewing culture change,emphasizing both the change to new behaviour and the reinforcement of thatbehaviour as important.

The research revealed several changes in the work operations of the banks.These changes represent a clear shift in the organizational culture ifsuccessfully implemented. Bank employees are no longer a safe group withhigh job security. Hence, managers now demand and strive for a level of“professionalism”.

Thus one manager said:

I think we have to express clearly what the bank is – from the starting point of the salesorganization we are now – clarify what expectations, what framework a cashier, a clerk workswithin and a salesman works within, so that we get rid of the old role when you’re here fromeight till four and you are allowed to be unpleasant if you want to. That shouldn’t be acceptedanymore.

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Such demands have been rare up to now in the banking industry. Employeeshave not been measured and there has been little in the way of formalizedperformance evaluation.

Of course it is possible to argue that such changes are a temporaryadjustment to conditions. Thus one needs to examine the environmental trendsthat have caused the change in the first place, i.e. the changes in the outercontext. Cultures are by the definition used here subject to external adaptation(Schein, 1985). If the changes in the environment are permanent and consistentwith the new behaviour of the organization, then this would indicate that thebehaviour would be learnt as appropriate, thus moving from behaviourreflecting the environment to cultural artefacts, implying that it has becomepart of the core culture.

According to some employees:It’s beginning to get rooted now. We have been in a period of change … I think we have donewell. We got a list yesterday with the things we said in the beginning … it’s a culture change,a change in attitudes. Some saw that earlier than others.

Figure 3.Culture changesimplified

Behaviouras cultural

artefact

Behaviouras environmentally

reflecting

New behaviouras cultural

artefact

Step 1:Change

behaviour

Step 2:Reinforce new

behaviour

Source: Author's research and Schein (1985)

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The sales-culture that has been introduced is beginning to get rooted among the individualemployees … it is something that lies in the future. The culture in this bank has been likesitting on your high chair, and meet the inferior customer and help them as well as possible.Attend to them. Now the whole bank-culture is turned upside down in a year or two. We havegot to get out to the customer, we can’t sit and wait for the customer to get to us. The wholerange of products is pushing the customer out of the bank … To amplify slightly, a normalwage earner, a normal, average customer, an employed person with a mortgage, a car-loan, astandard customer relationship, will no longer have to come to the bank unless there arespecial circumstances … And that creates a whole new way of operating for us, we have to getout and get hold of the customer either at home or at the workplace.

Not all employees and managers were as positive. Thus, two managers said:No, it [the proactive culture] creates great uncertainty. And some employees feel that … it is abit too pushy, it’s unpleasant. Maybe the customer has been somewhere else and got the sameinquires. They find it difficult to do cross-sales and other activity than what the customercame to do … but it is a change in attitudes going on now. Employees see the necessity whenthey look at the accounts and that this is the way other banks operates. And it’s the fact thatthe customers no longer go to the bank as often as before, so we have to try and get hold ofthem when we can.

No, we have maybe taken the first step on the ladder. And it is not rooted … We are in theintroductory phase of a new way of operating.

How can we explain these differences in perceptions about the change? First,there were clear differences between the units, both between branches andwithin banks. In some branches the change process had started four or five years ago while in others it had just begun. Second, the managers withtheir broader insight into the actual changes often took a more negative view as to the extent of change. They knew that a culture change was alengthy and far reaching process. Employees who lacked this insight, oftenthought the changes already carried out marked the entire change effort.Interestingly though, none of those interviewed thought the old behaviourwould return.

Branch management’s importance in culture changeAs we have noted most texts on corporate culture have to a large extentneglected the role played by middle- and lower levels of management. One of themain objectives of this research was to investigate branch management’s role inthe culture change process, and identify the significance this level ofmanagement has in the process. In the interviews questions were asked as towho employees and managers had perceived as being the most importantchange agent, and who the interviewees felt was the symbolic leader to branchstaff. The findings can be seen in Tables I and II.

The role of the CEOThe CEO has traditionally been seen in the corporate culture literature as themost influential change agent. However, our findings tell a different tale. No onein either bank – neither manager nor employee – perceived the CEO in theirbanks as their main change agent. This is not to say that the CEOs had not been

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SB SB CB CBemployees branch managers employees branch managers Total

Branchmanager 32 50 91 50 57Lower-levelmanager 39 25 0 0 20Districtmanagera 7 25 – – 5Regionalmanager 4 0 0 17 3CEO 0 0 0 0 0Ex branchmanager 4 0 0 0 2Sales managerregionb – – 9 17 5Other 14 0 0 17 8

n1 = 23 n1 = 04 n1 = 22 n1 = 05 n1 = 54n2 = 28 n2 = 04 n2 = 22 n2 = 06 n2 = 60

Notes:n1 = Number of respondentsn2 = Number of answers (some interviews named two or three individuals)a Only applicable in SBb Only applicable in CBAll figures are in percentage of n2

Table I.Who was perceived as the most important individual change agent by employees and managers

SB SB CB CBemployees branch managers employees branch managers Total

Branchmanager 58 33 86 75 67Lower-levelmanager 3 22 0 0 4Districtmanagera 36 33 0 0 19Regionalmanager 0 0 7 25 4CEO 0 0 0 0 0Other 3 11 7 0 6

n1 = 29 n1 = 06 n1 = 27 n1 = 04 n1 = 66n2 = 31 n2 = 09 n2 = 29 n2 = 04 n2 = 73

Notes:n1 = Number of respondentsn2 = Number of answers (some interviews named two or three individuals)a Only applicable in SBAll figures are in percentage of n2

Table II.Who is the symbolic leader to the people in this branch

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influential in originating the process. It is merely stating that to the branchemployees and managers, the CEO had meant little to them in the culturechange effort. Thus, one of the lower level managers said:

It is important that we have a CEO who is on the team and can be inspiring, either through ameeting, or through newspaper information or media. I think it is an important factor that weknow we have the backing of the CEO. But that he can have any day to day influence, I don’tbelieve in.

This manager thus believed that the CEO’s role had a more symbolic character,someone the employees identified with when appearing in the media, but withno real influence on the daily running of the branches. Employees commentsincluded:

That is a person I only watch on television and read about in the internal news … He reallydoesn’t mean more to me than the CEO of CB or Christiania [other banks].

He is a man I have never spoken to and has never been here.

We feel he is high above us … I think he is very distant.

These quotes indicate that the symbolic leadership from the top, thought of asso crucial in most texts on culture change, is close to non-existent in theperceptions of staff. It should be mentioned that very few actually criticized theCEOs for not being more involved: they all seemed to understand his role asbeing a distant one. It is clear though that top management was not perceivedas playing the role of the individual leading the change.

The role of branch- and lower-level managersIt is evident from Table I, that branch and lower level managers were perceivedas the most influential change agent by more than three-quarters of theinterviewees. The crucial question then is why employees had this perception.To answer this question requires a closer examination as to how culture changeis carried out. The first step of the culture change process, changing thebehaviour of employees, has been achieved by changing systems and structure,and through the new branch measurement system. Through these newsystems, regional and national management have been able to monitor thebranches to ensure that staff have adopted the new behaviour. Branchmanagers – at this step of the culture change process – can be seen as vehiclesof change, even if it is not their actions which have initiated the change. Rather,it is the centralized changes in systems that have created the changes and thusbeen the driving force in the change effort. However, it is clear that branchmanagers who act as the key link between head office and branches have acritical role. One of the branch managers, commenting on the importance ofbranch- and lower-level managers said:

It hinges on that. I believe that if I am negative about anything that is to be carried through,then it won’t happen at all … I believe I could constrain my whole branch if I didn’t stand onhis [the regional manager’s] side all the way down. I could be a major brake. So major that onlyparts of it could be carried through. And I feel that further out in my sections, that if my

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managers are a bit negative about something new, it takes far longer than if they really wantto do it.

Thus branch managers’ proximity to employees, and opportunity to identifyconflicts and problems in conjunction with the change as well as “decoding”corporate messages for employees play a key role in managing change.

The second step in the culture change process was identified as thereinforcement of new behaviour. The research indicates that branch- and lower-level managers play a significant part in this. If the sales performance in aspecific campaign was seen as good, there were rewards such as branchmembers getting an outing and other trinkets. However, employees generallyresponded indifferently to the formal reward systems of the bank. The largemajority of the interviewees did not think this made any difference to the saleseffort, and they did not see this as a major motivator. Rather, it was recognitionvia the daily reinforcement from branch- and lower-level managers thatmattered the most. Employees’ views included:

I believe that it is important that we have one central figure to relate to. His ability to influenceus is rather important. Where else should we get the signals from.

The closest leader is the most important … The co-operation there is pretty close, at least itshould be. And they have much more insight in what the individuals do than they have furtherup and have the opportunity to back us up and give praise.

There were differences found between the banks regarding the two issues.The first of these is the stronger position held by lower-level managers in SBin terms of being identified as the most important change agent. Theselower-level managers were most often managing the cashiers’ function andreported directly to the branch manager, while the branch managers weremore directly involved with the personal bankers and the sales consultants.However, while lower-level managers were seen as the main change agent inSB, they received no score in CB. As there are only small differences in termsof the number of lower-level managers, other factors seem to have caused thisdifference. Managers in SB worked closer together, functioning more or lesslike a management team, while in CB, lower-level managers only existed inthe larger branches. The branch managers in these larger branches weremore leaders in the true sense of the word, more distant and more symbolicin nature. One should also not forget the personal effect of particularmanagers which can influence these results. There were in fact only twobranches in SB where the lower-level managers were perceived as the mainchange agent. These two branches had exchanged lower-level managers fora year in order to carry out the reorganization with a new and fresh memberof the management team. This change seemed to have been extremelypurposeful as they in both cases were seen as the main contributor to thechange effort.

The second main difference can be seen in Table II. While branchmanagers in CB are seen as symbolic leaders to almost nine out of tenemployees, the corresponding score in SB is approximately six out of ten.

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The explanation for this is the strong position held by the district managersin this bank. The district managers in the SB are located in the main branchof the district and in many ways are in charge of that particular branch eventhough there are heads of the different sections; in both these two branches,staff viewed the district managers as their symbolic leader. This explainswhy branch managers held a stronger position in CB where the closest leaderwas the regional manager, who was clearly more distant from employees.

Change agent versus symbolic leaderFinally, there is the difference in scores between symbolic leaders and mainchange agent. It has been argued that only managers exercising a strongsymbolic leader function can implement major cultural change. The evidenceoffered from this research indicates that this is not necessarily the case. Thelower-level managers at SB were seen by more than a third of the employees asthe main change agent while less than 5 per cent saw them as their symbolicleader. Again, this conception might have been caused by how one perceivesculture change. As discussed earlier, one interpretation is that culture change isa behavioural change followed by a strong reinforcement of the desiredbehaviour. From this viewpoint, where value change is left to the individual,and organizations concentrate on the behaviour, managers can exercisesubstantial power on the actual change effort without having the status ofsymbolic leader.

Branch managers and changeThe reluctant managers?Having showed the importance of branch managers in the culture changeprocess, it is necessary to examine more closely how managers committedthemselves to change. An initial hypothesis when viewing the large scalechanges that have taken place, would be to suggest that branch managerswould be “reluctant” (Scase and Goffee, 1989), acting as compliant managers ina context where power and tasks are being removed from the branches, withresources and authority centralized. However, this did not appear to be thecase. There are several reasons for this. The most obvious is perhaps the factthat both organizations – just as the industry in general – had run into a seriouscrisis. It is no new phenomenon that change – at least of this magnitude – isachieved more easily when the organizations are in a crisis. Two of themanagers interviewed stated:

It is clear that to introduce a sales-culture when you do not need it, i.e. when the customerscome to the bank you don’t even have to talk about … It is clear that the situation we are in,where you have an alternative nobody wants, makes the process of change go much faster.

On a management level I think this [the change] has sunk in quickly. One has recognized theimportance of it.

The situation has therefore created an environment where change is easier toconduct. Most staff, have seen and understood the need for change.

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The “new” managersUnderstanding that change is necessary is not the same as agreeing with thedirection of the change. The average branch management tenure was less thantwo years in CB and around four years in SB. This clearly indicates that at leastin CB an almost entirely new set of branch managers have emerged after thereorganizations. The previous set of branch managers had moved to otherdivisions or to regional staff functions. By appointing this new set of managers(promoted from within) the banks presumed that they would more readily getpeople committed to the change in key positions and less hostile to changessuch as recentralization of responsibilities.

One problem specific to the new set of managers is the backlog of work theyhave brought with them from their old positions. As they are mostly giveninternal promotions, the customers they previously had contact with, in manycases continued to ask their advice. One of the main problems faced by branchmanagers is the balance between being a leader and being a banker. Severalmanagers complained about not having enough time to pursue their leadershipfunction sufficiently. This can partly be explained by the fact that they wereappointed at a time when branch staffing was being cut drastically and, hence,managers had to be operating managers as well as leaders. One of the salesleaders in CB said:

I have worked here through many years, so you drag with you a whole lot of tasks which youcan’t get rid off … My most important role is the leader role. It is obvious that is my mostimportant role. But whether it is sufficiently attended to is another question.

Hence, branch managers appointed from the “ranks” had problems inperforming their leadership function. It would therefore be fair to say that mostof these managers needed some time before they would be able to perform theirleadership role to their full potential.

Changing themselvesAll the branch managers faced a difficult task in changing themselves beforeany other change could be carried out. But while the old managers had tochange both their management style in the new working environment, andadopt to new banking tasks, the new managers were faced with changingonly the latter since they obviously had no previous branch-management styleto change. How swiftly managers can change themselves is clearly going toaffect how quickly the organization can change. As one of the branchmanagers said:

You can’t skip one step in the process. You are not turning on a switch when you work onvalues. So it’s a process that has started. But as a leader I will have to know what the bankstands for and what kind of culture they want me to bring forward, and I feel it has stoppedthere, I am not perfectly secure on that.

Thus it is difficult to lead a change effort if you are not completely secure in thedirection and content of the change. Some of the managers described theprocess as follows:

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I would say that from top management point of view there is more…they use the middlemanagers more. i.e. they work a lot on getting the middle-managers to identify as the leadersof SB. There’s a noticeable change there.

It was first of all a process in me as an old professional banker … it was a process in me thatI suddenly should be active towards the customers and induce him to do things he hadn’tasked for, i.e. selling my products to him. So I had to do something about my own attitudes, Ispent a bit of time on that. And when I had clarified this with myself, I discovered that mycolleagues were if possible even more frozen in the old reactive culture than what I was.

Only when the managers have felt committed to and confident about the newdirection, have efforts been made to alter the behaviour and attitudes of theirsubordinates. This is not to say though, that all branch managers were whole-heartedly in support of change. Some branch managers who did not supportthe new approach had left the bank. As one branch manager noted:

I know there are managers who haven’t been loyal to the decisions taken by top management,and they have disappeared after a while.

While not all the branch managers were comfortable with the new sales culturemany understood that they had to promote the concept. One of the managerssaid:

You can say that there were no managers with any experience in sales … It is mainly the samemanagers who are here today, and they have been through that process for better or worse.Some find it okay … and some don’t really like it. But then you haven’t really got any choice.

Whether employees did detect the less positive attitudes of some branchmanager, and change efforts were consequently slowed down is not easilyascertained. First, few branch managers were openly critical concerning theactual sales approach. Some were not wholly comfortable with being salespeople, but understood the need for the organization to move in that direction.Second, it is their behaviour towards the employees which matters, not whetherthey felt uncomfortable about it, although it might be argued that they wouldinevitably send out the wrong signals if they were reluctant managers.

What is clear though, is that the banks have seen the importance of branchmanagement and the need for this role to change if they are to be successfulchange agents. Furthermore, it seems evident that there is some differencebetween the banks in terms of how this problem has been approached. WhileCB seemed to have effectively changed their set of branch managers, SB hasconcentrated to a larger extent on changing the attitudes and behaviour of theirexisting branch managers.

The methods of changeThe methods of change being utilized by the banks is a complex issue and thereis the crucial question of who controls and carries out these activities.

Information and consciousness buildingThe role of the branch manager as the main source of communication both toand from branch employees has been briefly discussed. Information and thus

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building consciousness has been one of the main methods of conducting culturechange in both banks. Two branch managers, commenting on the methodsused in the change process, stated:

To illuminate the situation and then fine-tune ourselves. We haven’t got many carrots. Thereis a tiny bit of rewards.”

I am not really conscious about how I do it, but I am very aware about orientating, informing.

Two of the employees said:I think that process, the process of rationalization has helped the bank on the way. Becausethere have been reductions in costs, and we have been told explicitly what they expect from us.And we have known that if we don’t do it the bank won’t get good enough results to keep usemployed. It is that [threat] which has made us change.

I think we more or less have been pressured into it because we have constantly been presentedwith negative results and seen that we have lost market shares to competitors.

The use of information then, has had several purposes. First, it is clear that thebanking crisis and the rationalization processes that followed have created awhole new awareness among employees.

A second important aspect of information and consciousness building, is themore active use of measurement and performance targets in today’s bankingindustry. A number of sales results are reviewed on a weekly basis. Theseresults are then discussed and feedback given, both from regional level to thebranches and within the branch itself. There is no doubt that thesemeasurement systems play an important part in changing the behaviour ofemployees. This is typically one of the methods used in step 1 of the culturechange (see Figure 1). By measurement, the organization pressures theindividual into changing their behaviour. Typically, this behaviour change isperformed reluctantly, as it is colliding with the existing culture. The use ofthese information systems though, plays an important part in this first phase ofthe culture change process.

The third vital part played by information in the culture change process, isin building up knowledge. Under the traditional regime employees tendedonly to respond to requests from their customers. However, to be a successfulsales person, it is necessary to be knowledgable about products and to beconstantly updated on the latest developments. This has created a situationwhere employees’ need for information and training has increaseddramatically. Branch managers play an important role in their co-ordinationof training.

Reinforcing behaviourWhile information is mainly (but not solely) used in step 1 of the culture changeprocess, reinforcement of the behaviour is step 2 of that process. Reinforcementis not a straightforward task. In order to reinforce the right behaviour,managers are dependent on information, both information of a strategic natureand knowledge of the actual behaviour. This dual set of information is in most

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cases only held by branch managers, as acknowledged by Ireland (1992, p. 19)[1]:

Middle managers act as crossroads through which much of an organization’s informationtravels. As such, they are uniquely provided with more abundant opportunities to understandand reinforce a firm’s culture.

Hence, branch managers with their knowledge of both the strategic directionand the actual behaviour of the employees in the marketplace are in the rightposition to reinforce the appropriate behaviour. Lower-level managers do, inmany cases, not have the strategic insight to reinforce this behaviour andregional managers are too distant from the action to be able to provide swiftreinforcement.

It is also necessary to look at the type of reinforcement the banks wereutilizing. It was shown earlier that the fear factor had been the major force inaltering behaviour. However, in the longer term it may be necessary to build upa more positive system of reinforcement. If a change in culture as well as achange in behaviour is to be successfully achieved, the banks could be advisedto have a reward system built up when the crisis ends and the environmentstabilizes. It could be argued that the reward and reinforcement will merelystem from the fact that positive results are again achieved. This is, however,unlikely to be sufficient. First, the old reactive culture was not the main causeof the banking crisis. Thus, the proactive culture was introduced both as ananswer to the crisis and to meet technological progress and reorganizations. Itis clear that in the crisis situation of recent years, sales has been seen as the keyto survival. When losses stabilize, this reasoning will arguably not be aspowerful, hence the threat as a force for change will decrease in influence.Second, it is difficult to say whether the sales culture has developed sufficiently,during the crisis years, to be embedded. It is thus a major challenge for thebanks to come up with a positive reward system if the culture change is to becompleted successfully.

Messages in relation to measurementThe measurement systems are relatively new in the banking industry and havecaused reactions, both positive and negative. Most employees felt that theywere pressured into a new way of performing and in some cases they felt thatthis pressure worked against its aims. More worrying is the fact that themeasurement systems had severe flaws. First, the only performance measurewas sales, which meant that employees were rewarded only when they soldsomething new. Clearly they felt a conflict about how to spend their time giventhat most of them felt that they should spend time preserving and maintainingtheir old customer relationship thus making sure that the bank did not losebusiness. But as the measurement system did not reward this behaviour, stafffelt that these activities were not valued highly. Second, in SB, staff could onlynotate a sale if the customer actually signed the forms when he was in the bankat the time. If, for example, one gave the customer an offer and he returned a

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week later to take it up, one would not be able to claim a sale. Most employeesfelt that this created a pushy atmosphere.

The first of these flaws is particularly dangerous for the banks. If employees,through the measurement systems, have learned to give priority to new salesrather than preserving old customer relationships, the long-term results couldbe lost customers and profits. If Lovelock (1991) is correct that in general it issix times more expensive to acquire a new customer than to preserve an old one,this part of the measurement system appears very short-sighted.

In such circumstances the branch managers have an important role insending out the right signals. The individual measurements were solely subjectto the branch manager’s discretion given his responsibility for the branch’sperformance. Some of the branch managers commenting on this situation said:

It hinges on what responsibility us managers take for keeping the old customers, and themessages we send out. I try to emphasize the old customers and don’t give a xxxx about themeasurement. I don’t need to be best on measurement.

We work … hard on preserving the customers. And that has in many ways been the role sinceI got the job one and a half year ago, that it has to be more important to take care of thecustomers we’ve got rather than working towards getting new ones.

Two of the employees commented:

It all hinges on how your manager tackles the results and comments them.

The way [the branch manager] does it, we don’t feel it as pressure in that sense that he hangsus if we haven’t achieved our measurement objectives, because he doesn’t.

As the branch manager is the person most employees regard as their symbolicleader, he has an important role to play in the messages he sends to hisemployees. It could be argued that it is not in the strategic interest for branchmanagers to work against the measurement systems, as this undermines thechange effort. On the other hand it is clear that the measurement systems arenot perfect and may themselves need to be revised. This example shows theresidual power of the branch management despite the decline in formal powerand status, in that they can mediate the “instructions” sent by higher levelmanagement.

TeamworkOne of the most important behavioural changes was the new emphasis onteamwork. The branches are no longer split into several sections with corporateadvisers, private customer advisers, administration and cashiers, but consist ofsales consultants and customer advisers. This has created the need for a wholenew environment with regard to interpersonal relations at the branches. It wasclear that this operationalization of the manager’s tasks had a large impact onthe way teamwork was perceived among employees. The symbolic effect of thebranch manager stepping down and performing alongside employees was

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important in promoting the close co-operation and the social environment at thebranch.

It has been shown that branch managers are influential in the two steps of theculture change process, both changing and reinforcing behaviour. It wassuggested that information is mainly used to change behaviour and inconsciousness building. Branch managers, with their position as the maintransmitter of information both ways are vital to this communication. Branchmanagers are furthermore the main internal reinforcer of behaviour. The bankshad not built up any substantial positive reward system. Positive reinforcementthus came from the daily feedback and praise from branch managers. The needfor such praise to be instant (Peters and Waterman, 1982) suggests that branchmanagers are uniquely suited to conduct such reinforcement. Tables III and IVsum up the activities applied in the two steps of the change efforts and the keyforce in terms of employee perceptions.

Tables III and IV are an illustration of culture change. Thus it is for instanceclear that information can be a factor in reinforcing behaviour as well as inchanging it. However, the distinction between changing and reinforcingbehaviour is made for the sake of simplifying the analysis. In reality, these stepscan be interlinked. This is for example evident through positive feedback,which can contribute both in changing behaviour and in reinforcing it. Thismodel built around employee perceptions in the organizations studied has, webelieve, a wider validity.

It contributes some insight into the culture change process by highlightingthe fact that the sales activity in itself might be a force in the culture changeprocess. Both customer feedback and positive results will give employeesreinforcement for the desired behaviour. This further supports one of the pointsdiscussed earlier, namely that it is easier to change behaviour than it is to

Method Key force

Measurement system Top managementInformation Branch managementTraining Branch managementLead by example Branch management

Table III.The activities in culture change – step 1: changing

behaviour

Method Key force

Praise Branch managementBranch reward Top/regional managementThe sales activity CustomersThe sales activity Positive results

Table IV.The activities in culture change –

step 2: reinforcing desired behaviour

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change culture. As the model implies, reinforcement may to a large extent bedependent on external forces, and less within the power of the organization.

ConclusionThe main conclusion to be drawn from most texts on corporate culture change,is the need for strong leadership from the top. Without this leadership, thechange process is thought to be extremely difficult, if not impossible. There isno evidence from the research to suggest that this view is wrong. In both thecases investigated, one or more leader at the top – either the CEO or a head ofdivision – had made an initial effort to initiate the change. What was evidentthough, was that employees’ perceptions of such leadership were vague. Thissuggested that the performance of such leadership had to come from othermanagers at a lower level of the hierarchy.

This research offered an analysis of the culture change as experienced byemployees and their perceptions of the culture change activities. The studyclearly revealed that branch managers were seen as the central figures in theculture change process. The branch manager’s role has shifted from being adistant operator to part of the team, performing leadership with theresponsibility of creating results through the employees. While the leader rolehas lost some of its potential authority through the loss of status, the actualperformance of leadership has increased, in this sense signifying leading thechange effort. By strongly influencing the behaviour of employees and throughthe reinforcement of the desired behaviour, branch management guided theculture change process.

It is also important to look at the formal organizational systems andprocedures that were introduced in order to change employee behaviour. Themost important changes here were the introduction of measurement systemswith each employee having to record their sales on a weekly basis. However,such measurements were the subject of the branch manager’s discretion.Branch managers only reported the total sales effort of the branch to headoffice. This again meant that the branch manager had a key role in sending outthe appropriate messages to employees in terms of how they should relate to theformal measurement system.

We further discussed that the measurement systems had its obviousweaknesses as they emphasized the acquisition of new customers or salesrather than preserving old customer relationships. Branch managers had asignificant role to play in “decoding” corporate messages to employees andindeed modifying and interpreting the centralized message. On the evidence ofthe above discussions, it seems clear that a reluctant set of branch managerscould severely have interrupted the change process. As discussed earlier thelarge-scale reorganizations had seen a major reshuffle in terms of branchmanagers. It is likely that the new branch managers were appointed largely ontheir ability to lead the change effort and a positive attitude towards theproactive sales culture.

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Existing work on corporate culture and climate underestimate the role ofmiddle managers. The picture presented is of top leaders introducing missionand vision statements, supported by systemic or structural change to reinforcethe message, and that these impinge directly on staff, with middle managersbeing no more than a conduit. However, we would argue that top managementactions are usually mediated by middle managers. While in somecircumstances middle managers may whole-heartedly endorse the changes andthis may reinforce the message to employees that this indeed is the acceptednew way of doing things, it is also likely that in other circumstances middlemanagers mediate the message in such a manner as to change the message or toshow their own negative perceptions of the messages. Given that it is thesemiddle managers who are in daily interaction with employees it is theirinterpretation that is more likely to be hold sway. Hence both change inprocedures (formal) and changes in values (informal) are likely to be mediatedby middle managers. In our research, staff responded more to recognition viadaily reinforcement by branch managers than to the formal reward system.The message sent from the top may appear quite different when put intopractice on the ground. This does not always have negative consequences forservice quality. Indeed we have notice that branch managers felt that the newmanagement measurement systems did not place sufficient emphasis onpreserving customer relationships and mediated the formal instructions.

In environments such as banking and retailing where the middle manager isthe only manager who sees staff on a daily basis (unlike for instance a largemanufacturing plant) this middle management role is even more significant.Clearly more work needs to be done in examining this area. Furthermore, in acontext where middle managers may be threatened by change, this makes themuncomfortable agents of change. This has implications for the manyorganizations seeking to manage change.

The crisis created a context where all managers and employees understoodthat something had to be done. In many ways the collapse in existingassumptions made it possible to introduce new ones. Hence, the crisis createdthe possibility for change (Pettigrew, 1985). A crisis situation is seen as aidingradical change, in that one unlearns behaviour or in Lewin’s (1952) termsunfreezes the current behaviour. The banks had offered little positive rewardfor the desired behaviour. In the formalized system no substantial rewards wereevident. This meant that the bank’s positive reward system rested more or lesssolely on branch management’s recognition of employees.

However, such a formal reward system may have to be established soon(Ogbonna, 1993; Schein, 1985). This is not just to maintain the sales culture oftoday, but also because it is likely that in the future the concept of proactivesales will be extended. One employee commenting on the future of his bankingcareer, stated:

We have to get out in a role as pure salesmen. In five years we might not have a desk hereanymore. We might have an office at home with a PC, a telephone, perhaps a fax machine, andwe travel around to customers, selling and filling in borrowers certificates.

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The research indicated that employees were far more hostile to such changethan they were towards the changes that had already been carried out. Not onlywere such future reorganizations likely to lead to more upheaval, but there arealso signs indicating that the industry crisis is about to end. This suggests thatsuch deep-rooted changes will be more difficult to implement. However,conducting business today is very much about changing and being able tochange (Hamel and Prahalad, 1991; McKenna, 1991). The sales culture might beonly the first step of a long and continuous process of change. Technology andthe possibilities created by it, produced uncertainty among employees. Onemanager acknowledged this problem and stated:

The point here is that we cannot hide from the fact that we have got the access to technology.And it is also a fact that we can produce the services, we can deal with the transactionssubstantially cheaper with the help of technology. The problem that arises is an explanationproblem, that it will lead to job cuts. Ideally it should lead to employees saying “Great, then wecan use more time on the customer”. But often it isn’t like that.

The perceived lack of any clear strategies on what the future of employees’work would be when customers no longer needed to visit the bank, may hinderthe future change effort. Employees were worried about selling services thatwould eventually eliminate their job. Although management recognized thepossibilities of this and saw the positive aspect in being able to concentratemore on sales, employees were left in a state of uncertainty. One branch thoughcan serve as a small scale example on how management had reinforced thenotion that successful sales did not eliminate work. One new product leddirectly to two persons losing their previous tasks. Instead of being maderedundant, these two employees got new tasks within the sales organization.Such reinforcement may be important in proving that successful sales do notmean redundancies. Perhaps the communication of such strategies should beemphasized in the future in order to create an understanding of what bankingwill look like. When customers stop coming into the branches, the banks mustreorganize their way of work to a much larger extent than what has beenevident up to now. Whether this demands a new generation of employees whoare willing to act as pure salesmen or not is another important question. Theevidence from this research suggest that most employees would be against sucha change. These are important questions for the banks to tackle if the earlyprogress made in creating a sales-oriented culture is not to be wasted.

Note1. Ireland’s article would probably define branch management as something in between

middle- and first-level managers. Because of the structure of banks, where regionalmanagers are removed from the daily actions, it seems appropriate in this context to treatbranch managers as middle-level managers.

References and further readingBoothe, W. and Kikta, J. (1989), “Developing a sales culture: one bank’s success”, Bankers’

Magazine, March-April, pp. 32-6.

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Brubakk, B. and Wilkinson, A. (1996), “Changing roles of middle management? The case of bankbranch management in Norway”, Journal of Retailing and Consumer Services, (forthcoming).

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Grönroos, C. (1993), Service Management and Marketing. Lexington Brooks, Lexington, MA.Hamel, G. and Prahalad, C. (1990), “Corporate imagination and expeditionary marketing”,

Harvard Business Review, July-August, pp. 81-92.Huse, E. and Cummings, T. (1985), Organizational Development and Change, West Publishing, St

Paul, MN. Ireland, R. (1992), “Corporate culture best conveyed by mid level managers”, Baylor Business

Review, Spring, pp. 18-19.Johanson, H. (1993), “The operations of the Financial institutions in 1992”, Penger og Kreditt

(Norway), pp. B28-49.Kotter, J. and Heskett , J. (1992), Corporate Culture and Performance, Free Press, New York, NY.Lewin, K. (1952), Field Theory in Social Science, Tavistock, London.Lovelock, C.H. (1991), Services Marketing, 2nd ed., Prentice-Hall, Englewood Cliffs, NJ.Metzer, R. (1990), “Middle managers in the middle of planning”, Bankers Monthly, July, pp. 6-8.Morgan, G. (1986), Images of Organization, Sage, London.McKenna, R. (1991), “Marketing is everything”, Harvard Business Review, January-February,

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Peters, T. and Waterman, R. (1982), In Search of Excellence, Harper Row, New York, NY.Pettigrew, A. (1985), The Awakening Giant, Blackwell, Oxford.Pettigrew, A. (1990), “Is corporate culture manageable?”, in Wilson, D. and Rosenfield, R. (Eds),

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