1. Organisational Analysis & Design 21718 October 2009 Prepared by Whiteman, Medina, Dulariya and Raban For: Derek Sharp

2. Personal Interviews Ex-employee Journals / Research Management Magazines Management Journals ANZ Analyst Toolkits Annual Reports Equity Analysis Industry News ABF News The Sheet Lending Central Fairfax & News Papers Online Banking Review We used a wide range of sources…

3. Wiki used to aid collaboration…

4. 37,000 3,319 1,346 417,02 4 26 employees million dollars in profit (2008) branches in Australia (2008) million dollars in assets countries in Asia-Pacific with an ANZ presence A look at the numbers behind ANZ…

5. Personal Deposit Accounts Home Loans Credit Cards Share Trading Life Insurance Superannuation Foreign Exchange SME Overdraft Business Credit Cards Cash Flow Finance Merchant Services Key Man Insurance Corporate Super Institutional Commercial Bills Foreign Exchange Capital Markets Investment Bank Trade Finance Receivables Research ANZ as the customer sees it operating…

6. CEO Australia Retail Products Retail Distribution Wealth Commercial Banking New Zealand Retail Rural Commercial Institutional Wealth Asia/Pacific Retail Asia Institutional Asia Pacific NE Asia SE Asia Institutional Relationship Banking Markets Australia NZ Asia Shared Services Risk Strategy ANZ India Human Resources CFO Deputy CEO Products Geography Services Distribution The ANZ organisational chart is a hybrid…

7. CEOAustralia CEO Retail Distribution Head of NSW/ACT Local CEO – Sydney CBD BM – Martin Place BM – Macquarie Place Etc (8-16 branches each) Retail Products MortgagesCredit Cards The Local CEO model in ANZ (now adopted by others) makes each local CEO in charge of their own balance sheet. This makes each local CEO responsible for Expenses and Revenue, unlike previous models where branches were seen as a cost centre only. Used Local CEO’s for decision making…

8.  ANZ culture developed and changed over 170 years  Focus on providing better customer service  “More Convenient” banking culture  Creating value for their shareholders Culture has been a key focus for ANZ…

9.  Integrity: “Do what is right”  Collaboration : “Work as one”  Accountability : “Own your actions”  Respect : “Value every voice”  Excellence : “Be your best” The ANZ Values are clear…

10. Culture of Coaching Leadership  Culture of Coaching : Leadership Culture of Dialogue Communication  Culture of Dialogue : Communication  Build vibrant, High performing, Energetic culture in the Organization  Be Bold and have the Courage to be different The Breakout program was innovative…

11. From To Bureaucracy and hierarchy Meritocracy Controlling information Openness and trust Silo mentality Collaboration Cost-cutting Growth through innovation (Cost management)  Ongoing Process to become a bank with a ‘HUMAN FACE’  Build a trusted relationship between ANZ and its people, employees and the community. There are many cultural challenges…

12.  Poor financial performance during the 1990's.  John McFarlane becomes new CEO in 1997.  Employee Numbers have halved since 2000  In 1999 – only 49% of employees were satisfied working at ANZ.  'Silo' mindset – a mentality of survival that saw many employees not trusting their managers or the organisation. (Siobhan McHale – Head of Breakout & Cultural Transformation at ANZ).  Values Assessment Survey (2000) - employees chose words such as 'bureaucracy', 'hierarchal', and 'long hours' to describe ANZ. A history of ANZ Human Resources…

13. Management recognised that in the long run ignoring human resources issues was unsustainable. Therefore, ANZ launched the 'Perform, Grow and Breakout Strategy' in 2000. Focus on people and culture. Transformation 'from inside out'. Organisations don't transform, its people do. 'Breakout' - be bold, have the courage to be different, lead and inspire. Human resources friendly policies and programs were adopted. Breakout Strategy pioneered in HR… Shane Freeman

14. (i) discounts on ANZ products and services (ii) salary packaging choices i.e. salary sacrifices, additional super payments (iii) access to discounted ANZ shares (iv) since 1999 ANZ has annually allocated up to $1,000 worth of shares to part-time and full-time staff FLEXIBLE WORKING ARRANGEMENTS – Work / Personal Life Balance (i) parental leave doubled from 6 to 12 weeks of pay (2005) (ii) partnership with ABC Learning Centers Ltd to build and operate child care services (iii)Carers Leave Policy - 76 hours leave for employees to support family in illness and emergency Employees get numerous benefits…

15. PHYSICAL, EMOTIONAL AND FINANCIAL WELLBEING (i)My Health Program - free physical check-ups during work hours (ii)Mental Health Site - intranet website with mental health tips (iii)Performance Management – bonuses are based on a variety of criteria ranging from strategic orientation to people management LEARNING AND DEVELOPMENT – INVESTMENT IN PEOPLE (i) My Development Program - an on-line chat-room for managers and individuals (ii) Management Essential Program - designed to provide essential capability development for first time managers (iii) Accelerated Learning Laboratory – joint initiative between ANZ, Australian Graduate School of Management and other leading companies to promote skills such as critical thinking and collaboration (iv) Talent and Graduate Programs – nurture talent with leadership coaching, mentoring and development opportunities Development is a key focus…

16. WHAT LEVEL OF INVOLVEMENT DO EMPLOYEES HAVE? Through investment in 'its people' ANZ has a better qualified workforce and was able create specialised business units and appoint local CEO's amongst different divisions. This effectively pushed accountability further down the line and created a flatter structure with greater lateral integration and involvement of 'its people'. RESULTS OF HUMAN RESOURCES POLICY “IN USE” In 2006 ANZ had one of the highest employee engagement scores of all major companies in Australia and New Zealand. Employee engagement is an external measure of staff motivation. Stock price more than doubled, from $14.45 in 2000 to $30.03 in November 2006. (Better HR management is only one reason) Employees are involved extensively…

17. Mike Smith is appointed new CEO in late 2007. Introduces super-regional expansion plans into Asia/Pacific. Describes ANZ employees as complacent and soft. Parts of the 'Breakout' program are dismantled, explained by new leadership as a cost cutting exercise. First round of job cuts on the 5 th December 2008 dubbed “Black Friday”. Second round (early 2009) which took job losses to more than 1,000 in Australia and 200 in New Zealand - typically management and executive management staff. New leadership signalled a change …

18. In the meantime ANZ's Asia Pacific businesses were adding 100's of staff. Off-shoring started April 2008 where around 2.5% of the Bank's 9,500 technological support roles moved to India. ANZ commits $12 million in Australia and New Zealand for re- skilling and re-training for staff affected by job losses and off- shoring. Each Australian & New Zealand ANZ employee (at the end of March 2009) was generating $228,541 per annum, which was up 11% from one year ago. Number of Australian ANZ employees had fallen 2% in the same period. Australian & New Zealand employees generating more income with less people. Restructuring was inevitable…

19. However, employee engagement has dropped from 64% (2007) to 62% in 2008. Cost effective for now, however is this sustainable in the long-run? The numbers tell a good story… Graph source: http://www.anz.com/about-us/corporateresponsibility/employees/diversity-culture/engagement/

20. CEOAustralia CEO Retail Distribution Head of NSW/ACT Local CEO – Sydney CBD BM – Martin Place BM – Macquarie Place Etc (8-16 branches each) Retail Products MortgagesCredit Cards Local CEO’s Structure Power & Politics at a local level…

21. · What is the relationship between power and formal authority in this organisation? resources C B A Division 4 Division 1 Division 2 Division 3 Authority interests Resources are competed for extensively…

22. CEO Australia Retail Products Retail Distribution Wealth Commercial Banking New Zealand Retail Rural Commercial Institutional Wealth Asia/Pacific Retail Asia Institutional Asia Pacific NE Asia SE Asia Institutional Relationship Banking Markets Australia NZ Asia Shared Services Risk Strategy ANZ India Human Resources CFODeputy CEO Authority & decision making disbursed…

23. WeaknessesBenefits Conflict is seen as natural and inevitable, it challenges the status quo, stimulates interest and curiosity. Environment creates new ideas and approaches to problems. High power delivers regulation Intervention may be needed if too many conflicts arise. Bad managed conflicts lead to destructive power. Low power delivers poor control. Factors need to be carefully balanced…

24. “ANZ excecutives enjoy $500,000 holiday… before sacking staff” Mike Smith: 13million Brian Hartzer: 3.2 million Head Office at Melbourne 100 staff retrenched Have they got the balance right?

25. There are a few key challenges… Expand in a Considered Manner Create an ethical council that monitors power decisions Continue to Lead Understand the cultures in each territory, hire local talent Leverage multi-national relationships for customer acquisition To maintain the same levels of employee engagement and customer satisfaction during the current expansion process into the Asia/Pacific region. Understand the internal conflict within the organisation Create local support systems to avoid conflict Communicate bad news effectively Understand the variable cultures in personnel across the bank Be as open and transparent as possible

26. The End Sam Whiteman Antoni Raban Kaushal Dulariya Alex Medina