CASE STUDY:

ANALYSIS OF HORIZONTAL COMMUNICATION

FLOW OF CIMB GROUP

Izzati Rozman
Hilmi Che Ahamad
Sufian Suhaimi
Akmal Yusre
Amin Zoll

TABLE OF CONTENTS
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Title
Page

Table of Contents
i

1.0) EXECUTIVE
SUMMARY1

2.0)
INTRODUCTION
...1

3.0) BACKGROUND OF THE

ORGANIZATION
.3

4.0) COMMUNICATION FLOW OF THE

ORGANIZATION
.4

4.1) Proposed Situation 1.

5
4.2) Proposed Situation 2.
8
4.3) Proposed Situation 3..
11
4.4) Proposed Situation
4..14
4.5) Proposed Situation
5..17

5.0) RECOMMENDATION
..19

6.0) CONCLUSION
20

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7.0) REFERENCES
.21

8.0) APPENDIXES..
22

1.0) EXECUTIVE SUMMARY

This data analysis report is written to examine the relevant horizontal and diagonal

communication flow practices that exist in the CIMB Group Holdings Berhad. The main

reference for the analysis is primarily based on the CIMB Group Annual Report 2012. The

content analysis will be thoroughly illustrated through the projected situations based on the

activities conducted by the organization that utilized both horizontal and diagonal

communication flow via the proposed channel which simultaneously lead towards advantages

and disadvantages in the internal organization atmosphere.

2.0) INTRODUCTION

Horizontal communication is a type of communication that flows across the organization

from peer to peer in which most social interaction takes place within the formal organization

(McCroskey & McCroskey, 2005). According to Turkalj & Fosi (2010), horizontal

communication can be defined as communication that appears among people of the same status

within a department or among different working units whereas diagonal communication

appears among people of the different status who are not formally connected in the

organizational communication system (Turkalj & Fosi, 2010, p. 36).

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 According to Lunnenburg (2010), horizontal communication can be characterized as

informational communication practice where the main function is to tie together activities

within or across departments on a single school campus or within divisions in a school-wide

organizational system (Lunenburg, 2010, p. 5). Fall into three main categories, Cannary (2011)

categorized the main function of horizontal communication in three categories which are

Intradepartmental problem solving, Interdepartmental coordination and Staff Advice to Line

Departments. The main function of horizontal communication is to facilitate the communication

process in two condition where according to Nousiainen (2008), There are more employees than

managers and employees at the same level feel more comfortable talking with each other than

with people at different authority levels (Nousiainen, 2008).

There are certain advantages related to this communication flow in which the employee

can exercise open conversation, discuss work-related issue and problems, establish long-lasting

interpersonal relationships and better chance of survival in the organization while simultaneously

heightened the knowledge, communication skills, and socialization skills (Nousiainen, 2008).

According to Boyaci (2004), from horizontal and cross communication practices, employees

see their colleagues as informative, problem-solving, cooperative both in and other departments

(Boyaci, 2004, p. 685). Below is the revised framework model of Horizontal Information

Processing, proposed by Daft & Lengel in (1984).

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Figure 1: Revised Framework Model of Horizontal Information Processing, proposed by Daft &

Lengel in (1984).

3.0) BACKGROUND OF THE ORGANIZATION

CIMB Group headquartered in Kuala Lumpur, Malaysia is a leading ASEAN universal

bank with the branch network is the widest in the region including 1,080 retail branches in

Malaysia, Indonesia, Singapore, Thailand and Cambodia. CIMB Group is the largest Asia

pacific investment bank (excluding Japan) and one of the worlds largest Islamic banks which

offer consumer banking, wholesale banking, Islamic banking and asset management. At the end

of 2012, CIMB Group had about 42,000 staff and 13.5 million customers worldwide.

Our content analysis is primarily based on the CIMB Group Holdings Berhad (CGHB),

one of the listed companies of CIMB Group with a market capitalization of about rm56.7 billion.

With extensive network structure across ASEAN and beyond to support Network CIMB, the

major corporate vision includes management oversight, setting strategic direction premised on

sustainability and promoting ethical conduct in business dealings. The major corporate

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organizational structure consists of several departments that will be chiefly included in our

content analysis as the main approach in determining the flow of horizontal communication in

the organizational practices.

4.0) COMMUNICATION FLOW OF THE ORGANIZATION:

In this section, we aim to relate the drawback cause by the horizontal communication

flows that exist within internal organization with the remedial activities initiated by the CIMB to

correct the problem. In order to provide concrete relationship between the proposed situations

with the activities conducted, we based our analysis thoroughly on the information provided in

the Annual Report.

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4.1) Proposed Situation 1:

Decentralization of private information inside organization causes disruption in the

organizational hierarchy.

Situation:

The director of Department of Group Marketing and Communication are responsible to

develop an annual promotional pack on mobile app. In order to proceed, the Director must get an

approval from the Regional Office Board to secure their permission on the respective area

considering the matters of promotion and legal procedures. Since the hierarchical procedural

may take times and the time frames provided for the promotional launching are coming soon, the

directors personally contact each Support Directors and conducting a consecutive number of

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informal meeting to discuss the matter. The informal meeting, which serves as the channel for the

transfer of information sharing, alternatively helps to facilitate the info faster.

BOARD OF
DIRECTOR

GROUP
CHIEF
EXECUTIVE

SUPPORT

GROUP
GROUP CORPORAT GROUP
GROUP GENERAL
MARKETING GROUP E ISLAMIC
FINANCE COUNSEL
AND INFORMATION RESOURCE BANKING
COMMUNICATIO AND OPERATION S
N

FIGURE 2: Horizontal Communication Practice

Advantages

The horizontal communication practice can occur directly and informally without having to wait

for the centralize procedure. Besides coordinate the work flow effectively and enhance the

productivity of the work, immediate feedbacks lead to the effectual transfer of information,

encourage self-control and autonomy and create alternative means for individual to resolve

conflicting issue on the project.

Drawback of the Situations

However, upon discussing the matter concerning company investments and corporate

restructuring, the Director of Group Information and Operation expose the private info about the

companys upcoming restructuring practice. The transfers of complete information are done via

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the company electronic mail from Director A to B with the assumption it may help with the

promotional preparation. That information primarily intended to be only legally accessed by their

department A only and the confidential info that supposed to be kept as undisclosed pre-matured

plan later spread as the grapevine all across the territorial hierarchical structure of the

organization. Company e-mail, personal texting, instant messaging and blogs become the main

channel of the information to spread for other management and non-management staff and

somehow lead to the certain disadvantages to the company.

Disadvantages:

Some of the disadvantages may include frustration among the staff line because company

do not expose any direct information that should be within the staffs knowledge. Some of the

worker also may waste free time gossiping about the uncertain thing regarding the matter thus

disrupt the conduciveness of the work flow. Some of the drawback also includes the element of

territoriality in which the horizontal communications that take place reveals the premature plan

thus lessening the debut impact of the major transformational organizational reformation.

Besides encourage jealousy and envies among competitor, this situation may also lead to the

company contravention or breaching of info.

Activities conducted to correct the problem:

In order to correct the problem, some of the corrective measures were carried out including

enhancing companys information security strategies by developing security architecture to

counter the vulnerability of management system and security controls. Virtual Local network

router access control lists are deployed for the creation of security domains for group users and

network resources that allow restrictions on access and authorizations at the company database

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network. The Board also implements information security awareness programmes targeted at

internal employees to raise awareness about privacy, leakage of information and security

responsibility. These programmes also consist of e-learning and periodic newsletters circulated

within the Group.

4.2 Proposed Situation 2:

The emergence of the diversity issue regarding the nationality of the member in the senior

management position that leads to the dissatisfaction regarding the nomination plan and procedure.

In September 2012, the Biannual CIMB SEA was being held in Bangkok involving the

participation of diverse CIMB workforce from multiple cultures across the border and

businesses. Around 500 staff altogether taking part in the sport competition competing in wide

array of sports. During the gathering of formal luncheon, some of the international senior

management staff from international department issuing their dissatisfaction on the accessible

position allocated to fill in the member of The Boards position.

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 BOARD OF
DIRECTOR

GROUP GROUP GROUP

BOARD GROUP
INTERNAL CHIEF COMPLIAN
COMITEE RISK
AUDIT EXECUTIVE CE

GROUP
WHOLESAL CONSUMER CHIEF COUNTRY
SUPPORT
E BANK BANK EXECUTIVE HEAD
OFFICE

MALAYSIA INDONESIA SINGAPORE THAILAND CAMBODIA

FIGURE 3: Horizontal Communication Practice

Advantages

By facilitates the interdepartmental coordination, the implementation of horizontal

communication in the process endowed the participant with the immediate feedback from the

conflicting parties pertaining the issue while the fluidity of grapevine remains checked.

Supportive and intimate communications also are facilitated through the similar interest which

allows information sharing across work groups.

Drawback of the Situations

According to the justification, the opportunities for the domestic staff were regard as

highly accessible to the position compared to the limitation of chances faced by the global staff.

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The dissatisfaction aggravated and stirs up the heat when global and domestic staff whom

involved in the searing discussion initiate their own thought through the companys and private

blogs. The rumors clamoring for the organization is not being fair and castoffs the existence of

diversity in the organization itself. The rumors channeling through social media network and

inside organization while social activities and staff program becomes the medium of distributing

the rumors among the internal staff especially in informal chatting at cafeteria and hallway

discussion.

Disadvantages:

Jealousy may arouse between domestic versus global organizational staff because of the

miscommunication in the informational conduct of practice. This may lead to the disruptions in

the organizational function, deteriorating the psychological being of the management staffs due

to the existence of hesitation in the job demeanor, frustration exists alongside the dissatisfaction

due to the grapevine among the global staff and lastly interdepartmental rivalry may occur

between domestic and international department, hence lead to the disruption of the performance

and co-ordination process between both subdivision lines. This may de-bridge the gap between

the international and domestic staff where both party will be cynical to one another as the

privileges remain undefined pertaining the matter.

Activities conducted to correct the problem:

Some of the corrective measures taken to fix up the situation are the reviewed policy that sets out

a formal and transparent process for the appointment and re-appointment of Member of the board

and Senior Management Line besides the implementation of the Conducts for Interaction Session

plus the execution of Reviewed Nomination Framework. All the proposed candidates will be

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assessed based on the relevant skills and experience, competency in specialized areas of practice,

track record of success and so on. The processes for identifying and nominating new candidates

regardless of the nationality also reviewed and equivalently standardized by the Group

Nomination and Remuneration Committee.

4.3) Proposed Situation 3:

The Group fail to comply with the Shariah rules and principles determined by the relevant Shariah

regulatory councils or committees.

A and B both are the representative director for the Internal Audit Committee (Group Finance)

and Internal Shariah Audit Committee (Group Islamic Banking) attended an annual audit plan

meeting with another committee members. Upon completion of the task, both directors engaged

in the casual conversation to shed up some light in their basic area of job duties.

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 BOARD OF
DIRECTOR

GROUP CHIEF
EXECUTIVE

GROUP CHIEF
CONSUMER BANK SUPPORT EXECUTIVE COUNTRY HEAD
OFFICE

GROUP ISLAMIC
GROUP FINANCE
BANKING

FINANCIAL
CORPORATE
PLANNING AND
PLANNING &
COST
MANAGEMENT
MANAGEMENT

Internal Audit Internal Shariah

Comittee Audit Comittee

FIGURE 4: Horizontal Communication Practice

Advantages

By facilitates the interdepartmental problem solving, the implementation of horizontal

communication via the casual conversation endowed the participant with the immediate feedback

from the conflicting parties. Since information travels freely, the productivity of work also

increased since supportive and intimate communications are facilitated through the similar

interest which allows greater interest sharing across different work groups.

Drawback of the Situations

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Director A suddenly sparks an interest on the shariah procedural code and function involving the

examination and independent evaluation operations units within CIMB Group and their level of

compliance with Shariah rulings. Given the haziness on the respective individual basic job

duties, which also do not comply with each other expertise, the discussion lead to the diverse

outlook between A and B. B providentially bringing the issue pertaining the matter to the other

committee boards member, C. Both members, A and C engaged in the informal discussion in the

hallway and the issue further inflated during the in-house sports game weekend afterwards. The

issue finally reached the Boards when C spills out the issue during the talk after the formal

luncheon with the Senior Management Directors.

Disadvantages:

In term of the specialization, each individual with different expertise have their own frame of

reference (conventional vs. shariah viewpoint). While each party already have their own mindset

regarding the issue, the usage of jargon and highly specialized words lead to the semantic

ambiguity and distortion in the communication process as well as in the information transfer.

Some other disadvantages may include the higher possibility on the increased bottleneck on the

conveyed message. This often lead to the misleading guidelines to the unspecialized individual

whom dealing with the matters especially non-management staff. When rumors start circulating

within the internal organization strata, the reputation of company will suffer from the non-

recognition of income or earnings arising from invalidated Shariah contract.

Activities conducted to correct the problem:

There are three main activities conducted by the Groups to correcting the problem which is

emplaced system of internal control, sending the group executives to the training and adaptation

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of the New Guidelines for Shariah Committees member. New internal control allow external

auditors to have full and free access to meet periodically with the Group Shariah Committee to

discuss about audit processes and findings and the adequacy of the system of internal controls to

detect non compliance to Shariah. Some of the training attended by members for instance

AAOIFI Shariah Conference in Bahrain also prepares the staff to keep abreast with the latest

conventional market trends and developments. Finally, the revision of the New Guidelines is

adopted to ensure that the operations of the Islamic banking, capital markets and Takaful

businesses of the Group are Shariah-compliant.

4.4) Proposed Situation 4:

The exemplification of integritys value within the organization

Upon completion of the annual audit plan, X who is the Director for the Operations Audit found

out that the units that are assessed to be high risk are relatively higher compare to those that are

assessed to be medium or low risk. Prior to that situation, X personally contacted Y, the

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colleague from the Investigation Unit to access certain private and confidential records regarding

the troubling units.

GROUP
CHIEF
EXECUTIVE

GROUP
CONSUMER CHIEF COUNTRY
SUPPORT
BANK EXECUTIVE HEAD
OFFICE

GROUP
GROUP INFORMATI
FINANCE ON &
OPERATION

FINANCIAL
ACCOUNTIN
G

Head Office Institutional

Operation Investigatio Treasury &
& Insurance Integrity
Audit n Unit Risk Audit
Audit Audit

FIGURE 5: Horizontal & Diagonal Communication Practice

Advantages

By facilitates the intradepartmental problem solving, the implementation of horizontal

communication via the personal conversation facilitate the process of developing the

preventative measures in restraining the fraud allegation possibilities in the internal organization.

The immediate feedback also provided better efficiency in the information flow, increases the

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productivity of the staff, helps promotes task coordination between the departments and enhances

staff morale through the informational sharing across different work group.

Drawback of the Situations

Director Y who act as the Director of Investigation Unit provides the recent case file concerning

high risk unit that ought to be audited annually due to regulatory requirements, recent

incidence of fraud or High risk audit rating in the past year. Referring the case further to the

friend in the Group Information & Operation, more concrete evidence is ascertained by Y and

later conveyed to X. However, during the conversation via the telephone, both X and Y mutually

agreed that the details of the case are subjected to be classified and off the record. Following the

information given, X write to the other Director for the formal meeting to enhance the regulation

and guidelines for the Internal Audit to prevent potential alleged frauds and recommends

appropriate improvements to prevent recurrence and actions against persons responsible.

Disadvantages:

In term of Territoriality, this situation may lead to the company contravention/breaching of info.

Besides encourage decentralization, private and confidential information should not be accessed

by the third parties without the affirmation from the Boards and considered as information

infringement.

Activities conducted to correct the problem:

There are four main activities conducted by the Groups to correct the problem which is staff

training, devising Fraud Intelligent System, reviewing the course of disciplinary action and

conducting annual internal audit. The training was conducted in forensic psychology with two

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ongoing training modules on how to identify a fraudster by observation and ways to detect

suspicious signatures. A fraud intelligence system had been developed to track suspicious

transaction that does not rely on profiling and fixed Key risk Indicators (KRI). Diciplinary action

taken includes the dismissal of employment and filing of civil suit for recovery of losses against

the employee. As for audit, units that are assessed to be high risk are subject to an annual audit,

while those that are assessed to be medium or low risk are subject to a cycle audit.

4.5) Proposed Situation 5:

The Remuneration issues involving the executive and non-executive director

During the monthly meeting, several issues arise between the members of the committee

regarding the discrepancy in fees, monthly and meeting allowances for executive and non-

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executive director. Consequently, the Director of the Nomination & Remuneration Board

conducting a formal meeting with the Regional Operation Committee to review its remuneration

and compensation framework of the group which is linked primarily by Senior Managements

KPI (Key Performance Indicators). Although some of the issue happens to be resolved in the

formal meeting, yet some of the detached information remains unclear for the committee. During

the lunch break, A the member of the Nomination & Remuneration Committee engaged in the

informal conversation with Z, member of the Group Compensation Review Committee in the

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pantry.

BOARD OF
DIRECTOR OF
CIMB GROUP

GROUP
GROUP
NOMINATION
AUDIT BOARD RISK REGIONAL COMPENSATION
AND
COMMITTEE COMMITTEE OPERATIONS REVIEW
REMUNERATION
COMMITTEE
COMMITTEE

REGIONAL REGIONAL
REGIONAL REGIONAL
BALANCE SHEET CONSUMER
LIQUIDITY RISK CREDIT
MANAGEMENT BANKING
COMMITTEE COMMITTEE
COMMITTEE COMMITTEE

FIGURE 6: Horizontal Communication Practice

Advantages

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This type of horizontal communication which utilizes staff advice to line department saves times

a lot as the information can be obtained in the fast route. The flow of the work also coordinated

effectively due to the interdepartmental cooperation that simplifies the vertical communication

and the feedbacks on the question about the matters are immediately obtained via the supportive

communication practice.

Drawbacks of the Situation

During the conversation, A finally gets a hold on a possibility of attaching the compensation

package for the executive Directors of the Group if the Remuneration basis happens to be similar

with the Non-Executive Director. To make it fair, they have to extend the new remuneration

framework for non-executive director. To assess the possible risk on the future extension, A

informally reaches for the friend in Regional Liquidity Risk Committee in the Regional Office

asking about the matter via the telephone. During the exercise program conducted in the

weekend, they met and having short discussion on the particular issue before the tea break. Later,

A directly reports the progress to the Director for the advanced action.

Disadvantages:

In term of Specialization, ach staff has their own set of referent pertaining the matter. Thus, the

set of references might be indistinct from the actual guidance and differ across the departmental

function. This is somewhat impractical if the work is subroutine because it may lead to the

indefinite guideline. Time also will be wasted if the course of action is misleading and the

department already proceeds with the above-board action.

Activities conducted to correct the problem:

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There are four main activities conducted by the Groups to correct the problem which is reviewed

assessments on the potential candidates, setting of Key performance indicators for the Group

MD/CEO and the executive Directors of the Group, appraising and determining the

compensation package for the executive Directors of the Group, reviewing and implementing the

new remuneration framework for non-executive Directors and extending the new remuneration

framework for non-executive Directors to key subsidiaries of the Group.

5.0) RECOMMENDATION

Some advantages stemmed from the horizontal and diagonal communication practice

proves to be beneficial for the large organizational company that operates within thousands

employee and utilized decentralized approach. However, large financial-based organization such

as CIMB must rely not only on the vertical but also horizontal approach as well. This is to ensure

that direct and immediate transmission of information could be done swiftly within an

organization. Any drawbacks stemmed from the practice should not be deemed since via the

corrective measures taken, the post impacts largely compensate the disadvantages brought upon

the practice as a whole and prove to be beneficial to the organization in the long run.

Another way to encourage horizontal communication is via work teams. For instance,

management can built up team works consist of employee from different department to solve

companys problems. Given the free flowing and unrestricted communication, team would

perform well because of the synergy created, supportive problem solving strategies and at last,

more fun.

6.0) CONCLUSION

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 As a conclusion, the horizontal and diagonal communication may give both benefit and

detrimental effect to the organization itself. Given the appropriate channel of informal

communication taken place between the co-workers in the same position, intradepartmental or

interdepartmental problem can be either effectively solved or inefficiently facilitated. The

positive impact based on the situation proposed may include the effective information

coordination practice via the new implemented measures which strengthened the organizational

security itself.

Meanwhile, the negative consequences resulting from the grapevines are positively

altered via the corrective action taken by the Board. This measures indirectly facilitate problem

solving regarding the nomination and security issue, allow information sharing across work

group, promote task coordination between departments, enhance staffs morale and help to

expose the staff towards the awareness on the importance of privacy and security responsibility.

3015 words (exclude 297 words from citation)

7.0) REFERENCE LIST

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Bibliography
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Antalya: Akdeniz University.

Herreid, C. F., & Schiller, N. A. (2012). Case Studies and the Flipped Classroom.
Journal of College Science Teaching, 62-66.

Keyton, J. (2010). Communication and Organizational Culture: A Key to

Understanding Work Experiences. SAGE.

Lunenburg, F. C. (2010). Formal Communication Channels: Upward, Downward,

Horizontal, and External. FOCUS ON COLLEGES, UNIVERSITIES, AND
SCHOOLS, 4, 1-7.

McCroskey, R., & McCroskey. (2005). Organizational Communication for Survival:

Making Work,Work. Acton, MA: Allyn & Bacon.

Nousiainen, L. (2008). Improving Interal Communication Flow. Tampere Polytechnic.

Turkalj, Z., & Fosi, I. (2010). Organizational Communication as an Important Factor

of Organizational Behaviour. Interdisciplinary Management Research V, 33-
42.

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8.0) APPENDIXES

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