Today, The Royal Bank of Scotland (RBS) is one of the biggest banking institutions with its capabilities to provide world-class services whilst maintaining its reputation as a top financial services provider in the banking industry. Its leadership in this market is remarkable, and so are the ways the bank’s governing body has been able to manage the complexities, challenges and changes that come with the industry.
Understanding that the Royal Bank of Scotland (RBS) has recently undertaken a series of changes, this report provides an outlook of the approaches RBS has taken to manage those changes.
This report also includes the assessment of the success that RBS has experienced with the implementation of those changes. The implication of this approach and changes made on the part of RBS are also provided. A. RBS has undertaken a series of changes in recent years. Describe the approach they have taken to manage change and evaluate the success of these changes. Why has RBS developed such an approach?
The Royal Bank of Scotland (RBS) has been a leader in the provision of financial tools and services in Europe since 1727.
RBS has established itself as a pioneer of sustainable business restructuring and decision-making, which has helped it to maintain a competitive advantage in the industry. For a long period of time, RBS has been able to manage and cope with economical climate changes, but with the recent global economical recession and the challenges it has proposed, RBS has had to implement new policies and restructuring to its business in order to manage market uncertainty.
This means the bank needs not only developing elemental management approaches, but also including leadership innovations in its business structure to ensure adaptability to change. As part of its ability to take the lead in its industry, there were various essential moves RBS attempted to initiate in order to promote high level of achievement for its set goals and in order to achieve the required change for it to be able to be on top in its industry. Therefore, there is no other definite move that
RBS should demonstrate than to ensure emancipation of change as it tries to formulate actual effort to address the changing needs in the industry for financial services. After all, to ensure high level of leadership, coping with change is necessary (Kotter 1998). No one could contest the fact that major organizations providing financial services have to initiate change, and not doing so would only lead to their disadvantage in the future. The RBS has undertaken a series of changes in recent years.
In this report, the proponent tries to describe the approach that the bank has taken to manage change. The proponent also assesses the success of these changes. Part of this report is an explanation on why RBS finally made the kind of approach it has undertaken recently. RBS Approach As a leading financial service provider, RBS does not only ensure the achievement of higher revenue for its offered services, but above everything, profitability. To guarantee certain level of profitability, there were important trends RBS initiated for years.
These include the following: * Differentiated offerings through diversified customer segments. * High level in coping with change and complexities through creation of management roles and organizational structures. * Strong support for the human resource. * Quick adoption to external changes. Market segmentation strategy is made possible through segmenting customers into retail, commercial and corporate. The good thing about this strategy is making sure of maximizing opportunity for RBS by providing to various needs of its target customers to end up with sustainable operation.
As a result, RBS has finally succeeded today in providing personal, private, business and corporate banking experience for diverse customer segments particularly in the UK, leading to a programme of raising capital around ? 20 billion in 2008 (The Royal Bank of Scotland 2012). RBS is also known for its ability to create management roles and organization structures. In fact, it has become one major component of its expansion. RBS was remarkable in its acquisition strategy, especially in the nineteenth and twentieth century (House of Commons Treasury Committee 2009, p. 8). By then, RBS was already renowned as a “a leading banking partner to major corporations and financial institutions around the world, providing an extensive range of debt financing, risk management and investment services to its customers” (The Royal Bank of Scotland 2012). HR management and policies are other important approaches RBS was actively implementing before and continuing at present with refinements based on the current market needs. Such of these include major adjustments such as being quick to adopt major changes.
At present, RBS is quick to employ strengthening of its employee relations by making sure the right reward goes to the right person. This strategy creates a certain form of motivation that does not only promote quality, but substantial form of quantity at the same time. Finally, RBS has the ability to make use of the adoption of existing opportunities from its external environment. In 2007, RBS was quick to adopt new technology for the hope of delivering high customer value and increase profitability. Evaluating RBS success with emancipated changes
The success of RBS with initiating changes lies on its level of control obtained for each approach that it initiated for obtaining its corporate goals. For instance, RBS has been good at raising the engagement level of its employees, as there has been found an increasing productivity because the level of engagement has been rising (Stredwick 2012, p. 35). So here are the following assessments associated with RBS success with its emancipated changes. * RBS’s success is strongly associated with its implemented control (Stredwick 2012, p. 35). RBS’s success was made possible by combining consent efforts and opportunities from the information technology, organization and people (Watkins 1998, p. 83). Now it is clear RBS developed the above-discussed approach not only to ensure profitability, but to guarantee competitive advantage in its industry. Its ability to create major innovations and substantial changes only promote its potential to stay on top in the financial service industry, ensuring its sustainable operation while taking the opportunity to provide high value for customers and generate profit. B.
Describe how the evolution in technology has changed the banking industry and RBS in particular. Describe how technology will influence banking in the future. Technological evolution has immensely changed the banking industry for the last 20 years. At present, one cannot mention banking without technology, as the latter drives the whole system forward. When banks could not handle large volumes of information, they introduced computers (Panwa n. d. ). Simultaneously, there was increasing need to convey the financial information promptly to the human resource management and even cut the cost of cheque clearance system.
Remarkably, the introduction of computers by mid 1960s led to decentralization or redistribution of organizations’ duties. Banks use technology in designing new ways of satisfying their customers’ needs. For example, the introduction of Automated Teller Machines (ATM) led to reduction in the cost of delivering services via other channels like directly at the banking halls. These machines are convenient, safe, and quick in delivering services. Customers prefer to take a short time at their bank branches to get services (Panwa n. d. ). ATMs act as alternatives to banks, as customers can withdraw and deposit cash at any time.
This has helped banks to minimize the constant historical traffic of customers at their branches. The success in the ATMs usage has encouraged banks to include other technological advancements to help in services delivery; therefore, leading to cost reduction, massive production, and customers’ satisfaction. These other services include mobile banking, telebanking, Internet banking, and call centers. At the call centers, there are a lot of information, about banks, that customers can access 24/7 through their mobile and telephones. Specifically, the Royal Bank of Scotland (RBS) has also inculcated several ways of banking for their customers.
For instance, in digital banking, customers can manage their money at any place and time of their choice, or in mobile banking, customers can access the bank services through their Androids, iPads, Blackberry, or iPhones. According to RBS Personal Banking (n. d. ), digital banking is accessible 24/7/365, safe and saves time. Moreover, for telebanking at RBS, there is no monthly levy, customers can pay regular bills, and have their personal accounts managed at one place. This has not only helped them in ensuring high security to their clients but also reaching close to all their clients at ago.
Additionally, the RBS Group has developed mechanisms of making and receiving international payments. This method enables people in foreign lands to help their families and even buy properties. The royal budget is a method of sending small amounts of money, which do not require any agency. Evidently, technology has revolutionized the banking sector and the RBS Group in particular. Recently, there was an Information Technology (IT) failure at the bank, which the CEO blamed on constant innovation at the expense of updating of the existing systems (King 2009).
It is; therefore, evident that the RBS Group has been trying to develop new systems that are secure in order to increase their customers’ confidence. Although there was a system failure, it is evident that the bank uses more funds in the technological field. The bank worked with the CA Technologies in fixing the issue, which occurred because of a software system upgrade. The digital revolution, in future, will have a pronounced impact on the way banks carry out their activities.
Earlier, most banks valued the direct interaction with their customers, but in the future, this will change, as most customers will be accessing services like loan application through their mobile phones. Through mobile and internet banking, most customers will have their banks in their pockets (Dixon 2002). Consequently, there will be a reduction in the number of employees at the banks, as full digital automation implies no human movement and thought hence robots will be taking over. In addition, the use of videoconferencing will reduce travelling cost of bank executives (Marous 2011).
This idea will save time and travelling budgets, thus increasing efficiency in implementing changes in the banking services. In summary, the constant change in technology will force banks to adjust their management so that they can remain competitive in the future market. C. Describe and evaluate the approach of senior management to employees at RBS. Suggest ways in which RBS might attempt to maintain or encourage high levels of motivation. Royal Bank of Scotland (RBS) provides a wide range of financial services to over 36 million customers worldwide. Employees of the company are more than 140,000 people across the globe.
The group owns over 40 brands in the market including Coutts, Direct line and Churchill. For the company to provide world class service, it should attract talented people. In the face of competition for highly talented people in the job market, RBS stands a higher chance of attracting these talents. This is because it offers world class employment opportunities across the globe. RBS offers a variety of career opportunities ranging from bankers, traders, sales customer service, investment, business advisory, IT, marketing, finance, legal, and human resources. Secondly, “jobs at RBS are described in terms of specific job targets.
This allows management to gauge individual performance and reward accordingly for targets and objectives set at the beginning of the year” (The Royal Bank of Scotland: about RBS 2012). These are measured during the year and employees are paid for results. This reward scheme is a strong motivator in the group. Third, management of RBS has adopted Herberg two-factor theory. In view of this theory, employees at RBS get recognized for exemplary work done, management have in cultivated a collective sense of achievement in employees when the business performs well.
Finally, employees gain extra responsibility and growth after the regular performance reviews. In view of Maslow’s hierarchy of needs, management of RBS strived to create room for recognition, promotional opportunities and a chance for career growth. This boosted self-actualization of employees (Associated News Paper Limited, RBS scoops up Marriotts for ? 951m 2012). In addition, “the management created an opportunity for the employees across the globe to share a common goal and vision” (The Guardian: RBS tells employees: bank with us or go unpaid, 2007).
Finally, management created an environment for the employees to improve their self-esteem. Maslow further stated that motivation of employees is not only through money but also through other non-monetary benefits. Management of RBS embraced this ideology. The “total reward package for employees is made up of non monetary benefits such as health and medical benefits, paid holidays, confidential advice service, RBS financial products, and flexible pension funding. Further, the company encouraged employees to grow and develop their skills” (Scotsman. com, RBS xes 9,000 jobs in bid to cut ? 2. 5bn 2012). They have training and development programs. Besides, employees are encouraged to gain new skills that will make them stand a chance of promotion in future openings. Finally, RBS gives employees a chance to give back to their communities. This is done though various corporate social responsibility schemes which the company organizes (Business Case Studies LLP: Motivating through total reward, 2012). Ways to encourage and maintain the employee motivation Motivated workers are very efficient as displayed at RBS.
Therefore, management of the company should strive to maintain or improve current level of motivation because it reflects on the output of the organization. In addition to what is already put in place, the management should also consider enhancing team building. The company’s performance has been on a downwards trend in the recent past. This caused termination of employees and created loss in employees’ confidence since they feel their jobs are not secure. D. Describe the organisational structures RBS put in place to achieve its strategic objectives. Evaluate how successful these were.
At the time of formation of the Royal Bank of Scotland in 1727, it was a small bank with only a few small branches in central London. Each branch was under a manager, who had the powers to decide on the ways the branch was to operate. In addition, the communication with the main headquarter was poor; therefore, the branches could not communicate efficiently with the main headquarter. Up until 1960, this had been typical of any bank. Although the branches were managed individually, they could not fully meet the customers’ needs, as the customers had access to limited information.
However, towards the end of the 20th century when “IT wave” had struck, RBS services became more centralised, thus increasing its efficiency. Technological evolution immensely changed the banking industry and, at present, one cannot mention banking without technology, as the latter drives the whole system forward. When RBS could not handle large volumes of information, they introduced computers This action might have brought the down the cost of operation, yet the customers began to complain that RBS no longer involved them in decision-making.
For example, a customer in a remote location could not participate in decision-making, as he would be in the remote location whereas the main decision maker was in other part of the country; for instance, London. The bank’s management, therefore, could not know the cases or areas of concern of such customers. The main benefit of centralised decision-making is that it brings more control over products and risk assessments; however, decentralised system provided more flexibility for each branch, as the introduction of computers by mid 1960s led to decentralization or redistribution of organizations’ duties.
This bank could use technology in designing new ways of satisfying their customers’ needs. The RBS started to recognise this problem, and the changes were to follow. Notably, from the above diagram, the main strategic objectives of the Royal Bank of Scotland are to serve customers well, rebuild shareholders value, and create sustainable and conservative risk profiles. The Royal bank of Scotland decided to address its first strategic objective, to serve customers well, by improving the staff that would be working in each local branch.
The management left employees who were more interested in communicating with customers in the local branches, whereas the ones that felt more comfortable in carrying out financial procedures were moved to the manufacturing division; they did not have to deal with customers at all. The bank’s HR professionals divided the staff using psychometric tests. In the manufacturing division, the employees had to carry out routine tasks; these tasks included clearing of cheques, opening of accounts, convey the financial information to the human resource management, and other paper works.
The adoption of technology immensely changed the service delivery at RBS; for example, the introduction of Automated Teller Machines (ATM) led to reduction in the cost of delivering services via other channels like directly at the banking halls. These machines are convenient, safe, and quick in delivering services. Customers can take a short time at their bank branches to get services. ATMs act as alternatives to banks, as customers can withdraw and deposit cash at any time. This has helped the RBS to minimize the constant historical traffic of customers at their branches.
Interestingly, the RBS achieved the various strategic objectives, which the management had set. Currently, the Royal Bank of Scotland is among the most successful banks in the UK. For instance, last year, the RBS received the banking award for being the best bank for credit loans, most innovative for loaning services, most innovative for structured finance amongst others. Evidently, technology has revolutionized the banking sector and the RBS Group in particular. References Associated News Paper Limited, RBS scoops up Marriotts for ? 951m 2012, viewed 10 October 2012, <http://www. hisismoney. co. uk/news/article. html? in_article_id=408457&in_page_id=2>. Business Case Studies LLP: Motivating through total reward, 2012, viewed 10 October 2012, <http://www. thetimes100. co. uk/studies/view-brief-study-motivating-through-total-reward–106-258. php>. Dixon, P 2002, Future of Banking: New Technology impact on Corporate Banking, Globalchange. com, viewed 5 October 2012, <http://www. globalchange. com/technobank. htm>. House of Commons Treasury Committee 2009, Banking Crisis: Dealing With the Failure of the UK Banks, The Stationery Office, London.
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Cite this Case Study: The Royal Bank of Scotland Group Executive Summary
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