Barclays PLC Organisational Behaviour Case Study

1. BACKGROUND The firm focused on in this paper, Barclays PLC, is a global financial services provider with c.24,000 employees and engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services, and operates through six business segments: UK Banking, Barclaycard, International Retail and Commercial Banking, Barclays Capital, Barclays Global Investors and Barclays Wealth (Factiva, 2008). The firm expanded its US investment banking business with the acquisition of the US businesses of Lehman Brothers in September 2008 (Lambe, 2008). The firms investment banking divisions vision was to be the premier global bank in risk management and financing, and the Lehman acquisition was a transformational change meant to bring the business to premier global investment bank status (Schultes, 2008). Following the acquisition, Barclays has acted to integrate the Lehman Brothers US businesses in order to maximise the value from the acquisition. The investment banking business, Barclays Capital, and the investment management businesses, Barclays Wealth and Barclays Global Investors, are managed by Bob Diamond (de Teran, 2005). This paper presents a number of issues related to this integration. 2. ORGANISATIONAL BEHAVIOUR PROBLEMS / ISSUES IN THE COMPANY The acquisition of Lehman Brothers US businesses by the Barclays Group resulted in a number of key organisational behaviour issues that the business faced: Integration of Lehman Brothers US businesses A key issue was the integration of the US businesses of the Lehman Brothers. This had to be done quickly in order to minimise the disruption in the business, and mitigate the transfer of clients to other investment banks. While Barclays pursued the integration quickly, it was evident that the integration progress had placed a strain on the Lehman staff with some departing the firm for other opportunities (Masters, 2008). There was considerable uncertainty in the integration that was only made worse by the external environment which saw the worsening of the financial markets crisis. The leadership of Barclays and Lehman both played a critical role in the beginning of the integration of the businesses. Culture of Barclays versus Lehman A second issue that was critical in the integration of the businesses was the culture of the two firms which were evidently different enough to cause clashes between the staff. A key indicator in the success of integration of acquisitions of businesses is the number of staff staying put in the new organisation (Saigol, 2008). As there were a number of Lehman staff that did not join Barclays or eventually moved on to other organisations or just left the firm, there were concerns that the integration was not proceeding effectively for the organisation and that the handling of the integration by Barclays was resulting in the departures of the Lehman staff. Motivation of Lehman Staff Another issue related to the integration of the business was the motivation of the staff of Lehman Brothers.

Not only were the staff personally impacted by the failure of the bank but the integration of the Lehman staff into the Barclays business also placed a large uncertainty in the staff. Almost fifty days since the acquisition of Lehman Brothers by Barclays, a large number of the Lehman staff had left behind the new firm (Wilson, 2008). Those that continued on were not particularly motivated as there remained large uncertainty in terms of their role in the new organisation (Barclays) and the implications the move to Barclays would have on them, personally and professionally. The issues presented were three of the most critical issues which faced Barclays in the integration of the Lehman businesses and staff. This section was based on secondary research complemented by discussions with Barclays' staff that had experienced first hand the changes in the firm over the past few months. The motivation of employees is critical in an organisation as it is directly related to their job satisfaction. This should be managed proactively, properly, and effectively. For example, for an employee that is fifteen minutes coming back from break, it would be important to understand the reasons for the lateness, and the communicate clearly to the employee the expectation from the employee in terms of the promptness back into the office after the lunch break. 3. FINDINGS AND ANALYSIS The key findings across the issues cited in the previous section are presented below. 3.1 Integration of Lehman Brothers US businesses An important aspect that will come into play in the continued integration of the Lehman US businesses is the leadership in Barclays as well as the resulting organisation commitment of the Lehman staff for the Barclays organisation. These two factors, leadership style and organisational commitment, will play a critical role in minimising role stress among the staff, and positively impact the integration of the businesses (Dale & Fox, 2008). The two factors given will also impact on the emotions of the staff which is a key determinant, based on the coping theory, in how staff are able to cope with considerable organisational changes (Fugate, Kinicki, & Prussia, 2008). The stress on the staff will place considerable influence on how the Lehman staff will continue to approach the integration. The leadership in Barclays will be a critical factor in the effectiveness of the leadership and also firm performance, with social influence theory guiding the argument in the development of trust between the employees and the leaders (Douglas & Civnuska, 2008). Based on the organisational behaviour theories cited, it seems the actions going forward are to build the organisational commitment of the Lehman staff and ensure the effectiveness of the leadership of the Barclays senior managers. This will entail strong and regular communications and also support from the Lehman senior managers moving to Barclays. 3.2 Culture of Barclays versus Lehman It was clear that the combination of two firms with strong respective cultures would result in a clash that would need to be resolved internally in the integration. Organisational behaviour theory considers organisations as open systems, and as such is characterized

by numerous conflicts among their subsystems and operating parts. (Katz & Kahn, 1978; cited from Fischer, 2008). The integration was an obvious basis for potential conflicts between the staffs of the two organisations. It was important to manage the conflicts that existed or were starting to manifest in the integration of the businesses. As the key surviving entity, Barclays has an advantage as its culture would have the dominant base. In order to minimise the conflicts in the integration of the businesses, Barclays can effectively manage and control conflicts through the allocation of rewards and resources (Schein, 1992; cited from Fischer, 2008). The management and control of conflicts would be through: (1) providing relevant roles and responsibilities for the key people from the Lehman staff, (2) giving the opportunity for promotion at year-end to recognise contribution even for pre-acquisition activities, and (3) providing meaningful rewards for the Lehman staff at yearend despite only a less than half-year contribution to the Barclays business. 3.3 Motivation of Lehman Staff An important aspect in keeping the Lehman staff motivated during the integration process is to increase the organisational commitment that Lehman staff have on the Barclays organisation. Critical to the development of the organisational commitment is the enhancement of the trust of Lehman employees on the leaders and managers of Barclays. This is consistent with social identity theory of organisational behaviour wherein the trust of employees in their leaders and managers lead to strong benefits to the organisations including the increase in organisational commitment (Lau, Lam & Salamon, 2008). Barclays leaders should thus focus on initiating actions that would lead to increase organisational commitment from Lehman staff. In addition to the role of the leaders of Barclays working to increase the organisational commitment of the Lehman staff, the Barclays staff also have a role in helping to increase the motivation of the Lehman staff. Barclays' staff have an option in terms of their action to take. An option is to pursue no action even if the Barclays organisation faces risks in losing the Lehman staff, particularly those that are talented and are the ones that competitors would pursue first. This approach follows the bystander behaviour theory and is not very helpful in building an effective organisation with strong risk management capabilities including the management of staff (Gerstein & Shaw, 2008). Interestingly, the way to counter the bystander behaviour is by developing increased employee trust in the organisation (Day & Schoemaker, 2005; cited from Gerstein & Shaw, 2008). Both the leaders and the staff of Barclays should work together in improving the motivation of Lehman staff and also enhancing the organisational commitment to Barclays. 4. CONCLUSIONS AND RECOMMENDATIONS TO HUMAN RESOURCES Barclays will continue to face integration challenges with the incorporation of Lehman staff into the Barclays' businesses and culture. In order to address some of the potential issues that come with integration, Barclays can pursue the following actions which are consistent with some organisational behaviour theories cited in the paper: (1) leverage senior Lehman people to show stability in the integration and minimise Lehman staff departures, (2) ensure regular communications in order to minimise the uncertainty that the Lehman staff face in the integration of the staff and businesses into the Barclays

organisation, and (3) involve Barclays staff in a proactive management of Lehman staff in the integration process to enhance organisational commitment and motivation. These actions will help Barclays in the integration of the Lehman staff and provide a smoother transition for the Lehman staff into the Barclays organisation. The actions will help build a learning organisation as the employees learn from each other, and also develop with the increased knowledge from working with their peers. The recommended actions are designed to lower the stress levels in the organisation as well as improve the process flows with the increased communications across the organisation. Finally, the involvement of the Barclays staff in the integration will be very helpful to the Barclays leaders as this will help emphasise the commitment of the Barclays organisation in integrating the Lehman staff. These recommendations were presented to the Head of the Human Resources and presented for comments. There was strong support for the three recommendations as these are accepted actions that are designed to help the organisation in the integration of Lehman Brothers. There were several comments though from the Human Resources Head to enhance the recommendations further. These were: (1) leverage of Lehman people should be the Lehman staff that are well respected in the organisation, (2) communications should convey proper and strong messages, and also utilise various channels, and (3) involvement of Barclays staff should only be after there has been proper communications of the objectives of the involvement and the key messages to be delivered to the Lehman staff.

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