Professional Documents
Culture Documents
Nationwide describes itself as the world’s number 1 building society. In 1998, it had total
assets of 47 billion pound and employed approximately twelve thousand people. In the
same year, the society’s directors faced a significant challenge to its status as an
organization that is mutually owned by its members. Three resolutions were advanced in
relation to changing the society’s mutual status. The majority of members who voted on
these resolutions declined to change the society’s mutual status. However, this challenge
and other changes occurring in the operating environment of financial services
organizations, led Nationwide to respond to the environment in a variety of ways. One of
the key challenges in relation to these developments has been the need to control costs,
with a view to demonstrating to the members the continuing benefits of the society’s
mutual status.
The following extracts from the Directors’ 1998 Report illustrate these pressures and
their response to them:
The past year has been one of the most challenging and most successful in the
Society’s history. In a turbulent and increasingly competitive financial services
world, the Society has honoured its commitment to deliver real value to its
members and has experienced unprecedented growth…. By operating on narrower
margins than our main bank competitors, we have achieved product pricing which
has rewarded the loyalty of existing members and has attracted new customers …
At the same time, our administrative expenses as a percentage of mean gross total
assets have fallen from 1.25% to 1.21%. The net result as an increase in our
operating profit before provisions from ₤308.1 million to ₤413.7 million.
The need to compete in the changing financial services industry and to demonstrate to
members tangible benefits of its mutual status lies behind, at least in part, the introduction
of an HR initiative that is growing in popularity more generally. This is the restructuring
of jobs into what have become known as ‘job families’.
Nationwide defines a ‘job family’ as a number of jobs from different parts of the
business, which can be grouped by a common set of skills and accountabilities. The
introduction of job families in Nationwide was accompanied by related structural changes
such as restructuring, de-layering, and some downsizing in the parts of the organization.
These changes were deliberately planned to coincide to prevent employees having to
experience different facets of structural changes in the consecutive periods. However, it is
also important to recognize the introduction of job families in Nationwide as an integral
form of structural change.
In addition, the structure was also seen to lack flexibility. This was particularly
significant in relation to the society’s wish to take rapid decisions. Competitions were
being seen to reduce their response time in relation to providing decisions to customers,
typically about mortgage applications. This was a particularly important part of
Nationwide’s business objectives. The society needed to match, if not exceed, target
response time. Thus a flatter, more responsive, flexible and customer focused structure
was required.
Because of these needs, eleven job families arranged in five levels was introduced:
Level 1 families focus on service and support roles within the organization. There are
four such families related respectively to transacting business with external customers,
providing secretarial or administrative support such as information services; and manual
support.
Level 2 has three families consisting of those who generate customer business, those who
offer internal specialist advice, and those who are first line managers in the organization.
Level 3 is composed of senior managers who, in turn, are divided into two job families.
These are heads of department who are respectively concerned with managing a major
business-facing resource area or leading the development of a professional support
function.
Level 4 is a single job family of the organization’s general managers who are responsible
for developing and implementing the strategy of the Society in respect of a particular
group function or functions.
Level 5 is a single family of the executive directors of the Society, responsible for its
strategic direction and overall performance.
In replacing the previously much taller organizational hierarchy with five levels, it was
also agreed as a fundamental principle of the new structure that all employees within a
particular level would have to report to a manager at a higher level. These changes have
effectively helped to flatten the structure of the organization and reduce the bureaucratic
nature of decision-making. Previously, some queries may have had to be passed up
several layers before a decision could be taken and then passed down again for
implementation. Some organizations that have simply de-layered may have created
information gaps that are filled by those who remain assuming a larger area of
responsibility in order to cope with this change.
However, within each of the first two levels of organization of Nationwide in particular,
there is sufficient differentiation of roles through the range of job families, as well as
within them, to allow different tasks to be to be covered effectively. Consequently, many
managers have both wider span of control and a greater range of roles to manage.
Potentially this will transform the role of managing more into one of leadership and allow
managers to develop a fuller understanding of the links within the broader area for which
they are now responsible.
Individual employees will be able to understand more fully how their job relates to a
similar role in another part of the organization and other jobs into which they would like
to be promoted. Thus employees will be able to understand how their job relates to others
in the same job family and to posts in other job families. Employees themselves should
therefore be able to adopt a more proactive approach in pursuing their own required
training and development needs where this is appropriate. This development may be
focused within their existing job family or another family, or perhaps be intended to lead
to a job outside of the organization.
This approach to structuring the organization is therefore potentially much more
integrative than many traditional approaches. We have already described it as a holistic
approach to the design of organizational structure. This is because it has the capacity to
lead to the potential integration of HR strategies related to training and development,
career management, reward, performance management, involvement, communication and
organizational culture. Of course, the extent to which these HR strategies are integrated
and effective in practice in relation to the use of job families will depend on their
implementation and evaluation in Nationwide. Nevertheless, the potential for this
integration clearly exists and demonstrates how organizations may follow lead of
Nationwide in developing this type of approach in designing their organizational
structures.
[Source: Managing Change by A Thornhill, Phil Lewis, Mike Millmore and Mark
Saunders, Pearson Education]