Concept for confidence building. In retail banking business a relationship between bank and customer can start very early to maintain or to gain market share. Some retail banks employ a phase of life concept that starts right after the childbirth of a potential customer. The objective of this concept is to establish a relationship between future customers and the bank very early or at least to stabilize the relationship between parents and bank. When young customers enter their “professional life” – i.e. when leaving the high school – they have already gained experiences in terms of financial products; furthermore they have made their own experiences with banks. Hence these young customer can use their experiences when evaluating issues like liability, friendliness, fairness and accurateness of a bank. In addition customers can use external product reviews and interest rate comparison lists from customer organizations as external data to confirm or disprove his evaluation. Such experience generation is essential to establish a frame for calculus trust.

Calculation by the customer. Within retail banking business calculus trust plays a major role on two different occasions. A customer can rely on personal experiences and prefer certain bank products when making the purchase, assuming that the bank and its products performance as hitherto. A customer can also rely on experiences and prefer a certain bank when accepting purchasing recommendations to buy products of other financial suppliers than the bank itself. The latter one is based on customer’s additional hypotheses that certain parameters are in place which control the bank’s process to select external products in order to achieve customer satisfaction. HOCH and DEIGHTON (1997) have confirmed that customers use hypothesis in their interaction with the environment; furthermore they also learn from experience. In the case that a customer has made a positive experience with a bank product he assumes that considering purchasing recommendations for external products will cause positive results, too.

At this point I would like to highlight a critical issue. Many retail banks follow an open-architecture approach today. This term expresses the concept to sell both products and services made by the own organization as well as products and services from external enterprises. The integration of external products creates an additional consulting conflict for a bank, since the criteria of selecting external suppliers may be driven by profit orientation instead of customer advantage.

A factor that determines customer’s experience is the personal relationship with bank’s representatives. One has to consider that the production of banking products requires customer’s participation and therefore the interaction with the bank organization. In some cases this interaction takes places in an impersonal way, i.e. when the customer records data on the bank’s website. Despite all technological developments a specific number of situations both in service and consulting require a personal interaction between customer and customer consultant, i.e. when the bank employee interviews the customer in terms of financial objectives to present product recommendations. In such cases the personal relationship will determine both quantity and quality of information. In an established and cultivated relationship the customer is prepared to offer more information about his needs; otherwise the bank employee can consider more information to select the relevant product class, to select an appropriate level of product customization, and to highlight those product features that might be important for the specific customer. Taking into account customer’s objectives the bank employee can change product class or modify product bundles as well as the range of product information.

The calculus trust perspective is an important aspect for banks which want to establish a long term relationship with their customers. Banks have to consider that in particular this concept takes time and effort in order to establish a positive track record of experiences.

• 1.74 million tax payers are addressed by the top income tax rate in Germany
• Revenues generated from this group account for 42 percent of the total income tax.
• In Germany top income tax rate starts with 52,882 EUR salaries; hence it addresses skilled engineering workers and other professionals, too. In Norway the top income tax rate starts with 93,000 EUR, in the state of New York with 270,000 EUR.
• In 1958 the top income tax rate started with app. 60,000 EUR (120,000 DM). At that time the average salary accounted for 2,700 EUR.
• In order to achieve the same economic level of 1958, today’s top income tax rate should start at 1.5 million EUR.

Today the so called “top income tax rate” is not a top income rate anymore.

Note: All data from Inacker, M., & Schrinner, A. (2012). Peer Steinbrück für Steuererhöhung. Handelsblatt, 2. April 2012, p. 1 and p. 6

Boston, January 31, 2012 –Organizational capabilities greatly affect long-term corporate success and none more so than behavioral aspects. But behavioral attributes have high impact only when they’re backed by strong structural capabilities. Efforts to develop robust organizational capabilities are likely to pay off in performance that outstrips that of competitors.

Those are the key findings of Organization of the Future—Designed to Win: Organizational Capabilities Matter, a new Focus report by The Boston Consulting Group (BCG). The study, conducted in partnership with 12 management organizations worldwide, surveyed approximately 1,600 senior managers, seeking their input on a framework of 20 organizational capabilities—both structural and behavioral. This framework encompassed a wide range of structural capabilities—from the organization’s spans of control to project management and business analytics—and many behavioral capabilities, such as adeptness with change management and employee performance management.

All Capabilities Matter to Success, but Some Matter More Than Others

The correlations showed that all 20 types of organizational capabilities have an impact on overall performance—though clearly some have much more influence than others. “There’s a definite bias toward behavioral factors—in particular, leadership, employee engagement, and cross-functional collaboration,” said research leader Fabrice Roghé, a Duesseldorf-based partner at BCG. “But the best performance comes when those traits are backed by structural capabilities, such as a strong organization design and rigorous business processes and controls.”

Christopher Kinsella, Acting Chief Executive of Chartered Management Institute, said, “This research confirms the importance of strong leadership, high employee engagement, and a collaborative approach to work within an organization–all of which depend on key leadership behaviors. The report highlights how the ‘softer’ behaviors and values can often make more of an impact to productivity and performance than the structural capabilities within a company. It is significant that there is such a gap between best practice and the day-to-day experiences in companies. This is where the role of management training and enhancing leadership skills is critical to ensure behavioral development, effective delivery of strategy, and the consequent success of an organization.”

The BCG publication recommends three priorities that can lead to big gains in performance. The first entails paying particular attention to leadership, employee engagement, and collaboration as key performance dimensions. The second priority is to align and improve people practices. The third is about organization design—ensuring that the company’s structure is aligned not only with its business strategy but also with its cultural goals and target behaviors, and is complemented by clarity in roles and cross-functional processes.

This BCG Focus contains many insights that can help companies gauge the impact of their organizational performance. A follow-on Focus will explore the transformation journey that most companies need to take if they want to close the gap between their current organizational capabilities and those that constitute best practice today.

To download a copy of the report, please go to www.bcgperspectives.com.

Calculus trust. Calculus trust considers the information passed; the source are social experience and past own experience with the specific firm. Information for this trust can also be based on tests of quality, guarantees, and findings. Calculation is one of the main elements of consumer trust; retail banks employ certain concepts to support this confidence building.

Institutional trust. Institutional trust plays a crucial role in the banking business in general and in retail banking in particular. This trust modification is based on activities of customer organizations and existing legal regulations. According to BAUER et al (2007) institutional trust combines two aspects, one aspect concentrates on persons and another aspect focuses on their position within the society. Trust in bank employees is simultaneously trust in financial institutions when, for example customers assume that the bank employee in the local branch or in the call centre will render them the services which they can expect in legal terms (based on their contracts). This assumption is not based on results of interpersonal experiences – though it can be affected by those – but on induction from other experiences. Hence trusting in specific types of organizations, i.e. banks, in terms of an institution in everyday life means to bind a specific situation to a particular framework.

Personal trust. Personal trust represents the third alteration of trust. NOOTEBOOM and SIX (2003) highlight that developing trust in the form of personal trust requires substantial efforts on the part of the individual actors. BAUER et al (2007) define personal trust as trust in already existing relationships. Like calculus trust this trust form is based on experience. GIRMSCHEID and BROCKMANN (2005) call this trust as “history based trust”. But personal trust is based on a specific strand of experience which is independent to other strands and includes a degree of generalization of experiences. GRUDZEWSKI et al (2008) argue that in personal trust the customer fully believes in a given brand and the brand’s controls.

In this trust situation the customer perceives all undesirable situations or circumstances as something very rare. This belief in the overall brand can arise because of a sound long term relationship between retail bank and customer. This is in line with a small relation between age of the customer and personal trust. According to WITTMANM et al (2008) the effect of age is not significant in terms of personal trust; however it was observed that the following tendency exists: the older a person is, the more reluctant he is to be willing to trust.

Here are some impressions from the conference and from Dubai:

During the conference

◄ Back

Next ►

Picture 1 of 21

For the Android-people I would like offer this recommendation: In the Android market you can find a very good app called Dubai City Guide, which offers maps, photos, recommendations including phone numbers and website. Features include

- A guide covering the top things to do in Dubai
- Map of Dubai
- 100% offline – including maps
- Augmented reality
- Sharing functions
- Travel itinerary

Here you can watch a small clip “above” the Dubai Fountain from the perspective of the At.mosphere Lounge (app. 440 m over ground)

BBC News – Q&A: Greek debt crisis.

Some impressions from the fair ground:

Women’s quotas are mainly discussed in the context of necessary changes in the way business is done. Women are said to have a different management style and hence, a higher proportion of women in top management would change management culture. This idea became even higher priority with the current financial crisis, which is partly attributed to greedy (male) managers.
I will not discuss here my personal opinion about the chances for better management decisions due to a higher number of female managers. Neither will I elaborate about my opinion as a woman on the question if all these initiatives are what women need for their careers. Nevertheless, women’s quotas are related to questions of corporate government, regulation and sustainability and thus are part of some important megatrends. Hence, businesses are well advised to think about this seriously.

The first question of course is to decide whether this trend is relevant for a particular business. As far as political regulation is concerned, this may depend on the country and the size or legal form of the corporation. But even if there is no legislation pending on this, public opinion could still force businesses to deal with women’s quotas. It is advisable to do a careful stakeholder analysis on the intentions and power of stakeholder groups that may have an impact here. Such are press and media, trade unions, lobby groups and other special interest groups.
If the proportion of women in top management seems to become relevant for a business in future, some more questions arise:

• If a business needs more female managers – where would they come from?
• Is there enough female talent around? What is the proportion of women in the industry and in relevant study courses?
• What is the typical career path of women in that industry? To what level of management do they normally get? Why do most women not reach higher management levels? Do they want to advance further in their careers at all?
• Are there other female talent pools, i.e. other countries or industries?
• How could it be made easier for women to reach top management? I think the typical mentoring programmes and dedicated training courses will not be enough. Rather, questions of work-life-balance and reconciling work and family life need to be addressed.
• What if all efforts to attract a sufficient number of sufficiently qualified women fail?
• And last but not least: What do you do with all the men who aspire to a management position that is now dedicated to women? Over the last decades it has already become much harder to get a position in higher management due to strategies of lean management and flat hierarchies. Women’s quota initiatives will invite even more participants to the race for an unchanged number of positions.

Today we have to answer the question whether (at all) and to what extent this opportunity has been exploited. VENKATRAMAN and MADASU (2009) argue that parts of the risks management systems and approaches in some banks were more on paper than in practice. The challenge in the next few years (still!) is to identify the right course for the long term in terms of greater transparency, effective regulation and appropriate tolerance for business growth. The general risk was that under the impression of the first turmoil, the primary focus is on trying to reduce the particular weaknesses only which caused the specific failures at hand. 3 years later we have to conclude that some major players in the market (i.e. SOG, UBS) did not make their homework. Even a triple A rating has a small default risk, but definitely not zero. Furthermore banks have to address the question whether they should rely their investment decisions on a rating only (compare S&P “Are Credit Ratings indicators of investment merit?“…..
In evaluating an investment, investors should consider, in addition to credit quality, the current make-up of their portfolios, their investment strategy and time horizon, their tolerance for risk, and an estimation of the security’s relative value in comparison to other securities they might choose.”)

Financial service organizations that focus on long term and sustainable success require an operating environment with regulatory conditions which support two objectives simultaneously: They offer a protection against turmoil and also support the efficiency of the sector by an appropriate combination of stability, a level playing field, and the possibility to perform. Furthermore it is essential that all regulatory bodies have the organizational resources to monitor a sound application of regulatory requirements and to identify malpractice of regulatory gaps. This in sum can be the best means of preventing crisis.

10. Time-wasting
Giving your IT team the latest smartphones to communicate better is a great idea, but you need to be careful about monitoring their usage. Yes, you want this tech to help them do their jobs better, but you don’t want them to be playing Angry Birds all day. Before you start handing out iPhones or HTC Desires, be sure you can keep a lid on any time-wasting that may occur as a result.

9. Theft from the workplace

When a company starts investing in the latest ‘must-have’ consumer gadgets, they can unfortunately make themselves the target of thieves. Where there are expensive items, there are eager eyes. You can avoid theft from the workplace in a number of ways, so be sure you’re covered before you deploy the latest consumer tech.

8. Security of internal documents and files

Lots of companies give their employees the latest laptops, phones, or other gadgets, because they are fit for purpose – they help get the job done well. But if your employees take these gadgets home, they’re also taking files and documents which may be dangerous in the wrong hands – so make sure you have measures in place to keep your data safe.

7. Protection of company logins/passwords

As with the above point, your new consumer tech may be password protected, but that doesn’t mean it’s 100% safe. Be sure your employees don’t have ‘auto-login’ or similar enabled or you could be making your company vulnerable.

6. Key benefits to the company

Before handing out iPads to all, make sure that they will benefit the company. It’s very tempting to get ahead of your competitors in terms of tech, but you must be sure it’s worth your initial investment. Nobody likes to waste money, after all.

5. Non-consumer alternatives

Consumer tech is great, but sometimes companies release corporate versions which are more suited to the workplace. Operating systems, for example, frequently provide ‘professional’ versions for the workplace. Do your homework so you invest in the right product for you.

4. How much time will be dedicated to these devices?

This goes hand-in-hand with time-wasting. Will these new devices be worth the time they take up? Try to balance the benefits they provide to your IT team with the amount of time they take up in a working day. A test run is a good way to be sure of this.

3. Technical support

Consumer electronics usually have dedicated tech support, but not necessarily tailored to businesses. If you have a large scale issue, you want to be sure you’re covered – so do your research first!

2. Where to draw the line

Know the difference between a useful business gadget and a ‘boy’s toy’. Your employees will welcome the latest tech, but you need to be sure it’s for the right reasons. Your business success should be your first priority.

1. General security
The number one consideration should always be the safety and security of your company. If consumer electronics open you up to hacking or loss of sensitive data – simply do not take the risk, look at corporate alternatives instead.

Note: Eddielogic thanks Susan Black, our guest author for this post.