Intercultural Management: MBA Masterclass (MBA Masterclass Series)

Case Study: Credit Suisse

In 2001, Singapore was the world's fourth largest financial centre, with the top three being London, New York and Tokyo. (See the following Web sites for more information about Singapore's appeal as a location for banking operations: www.mas.gov.sg; www.Sicc.com.sg; www.gov.sg/sg/sgip/PDA/snapshot.doc; www.tdb.gov.sg/bizspore.sp1.html; www.singstat.gov.sg.) It was also an offshore financial centre (OFC) designated as belonging to the Group I category by the Financial Stability Forum (FSF) of Basle, Switzerland.

OFCs in Group I have the highest quality legal infrastructure and adherence to internationally accepted standards of supervision, cooperation, and information sharing in the world. OFCs in Group II have the second best infrastructure and internationally accepted standards of supervision and so on. OFCs in Group III reflect the next best international standards after Group II. (Source: Report of the Working Group on Offshore Financial Centres , 5 April 2000.)

It was in Singapore that Credit Suisse Private Banking (CSPB) launched a new first-of-its-kind banking service in 2001. CSPB is part of the Credit Suisse Group, one of the world's leading financial services groups, and the oldest of Switzerland's big banks. CSPB came into existence in 1997, when the Credit Suisse Group's private client business was consolidated into a single entity and became one of the four business units of the Credit Suisse Group. Since its emergence, CSPB has been one of the largest private banking institutions in the world, with branches in 43 countries . Its latest reported figure for assets under management (31 December 1999) was 477 billion Swiss francs, while its net profits stood at 911 million Swiss francs, an increase of 14 per cent over the previous year.

CSPB was constituted by the Credit Suisse Group, in response to the volatile changes that have coloured the banking world in the past decade . In recent times, millionaires with new money have shown a proclivity to transfer their assets from one bank to another, if the latter can manage their funds more profitably. The Economist (16 June 2001) noted that 'the sleepy Swiss private banks are waking up to the growing threat posed by foreign competitors , especially American ones, which now account for some 25 ”30 per cent of foreign money managed in Switzerland'. CSPB is the Credit Suisse Group's answer to suggestions that Swiss banks had descended into a state of slothful stupor. The Group recognized that it should adapt its traditional Swiss banking model to the requirements of a more diversified clientele. Globally, there is now greater competition in the area of private banking than ever before, although worldwide still no single private bank has more than a 2 “3 per cent market share.

CSPB has experience and expertise in providing both onshore and offshore financial services. As has been the case traditionally with the Credit Suisse Group, CSPB caters to the richest 1 per cent of the world's population. A client with CSPB is expected to deposit assets of at least 1 million Swiss francs. CSPB offers both offshore and onshore services at its branches around the globe, except for those few locations that operate as 100 per cent offshore centres, like the Bahamas. Consequently, its structure has been uniquely designed so as to be global in some respects and local in other ways. As far as the provision of onshore financial services is concerned , a CSPB branch obeys local banking regulations. Thus the CSPB branch in Frankfurt, when providing onshore financial services, caters to German clients , manages assets that are booked in Germany, and operates within a legal framework that is dictated by German law. For many intents and purposes, CSPB Frankfurt is like a German bank. The same strict adherence to Singapore banking laws would hold for CSPB Singapore. In that sense, CSPB Singapore resembles a Singapore bank.

However, CSPB Singapore is structured differently from other financial services institutions in Singapore. One reason for this is that CSPB Singapore is an offshore private banking facility. It is like a Swiss model of a private bank that has been exported to Singapore, with the caveat that it is aligned with Singapore's legal system. CSPB Singapore thus demonstrates a certain duality in its functioning. On the one hand, it is structured to obey all the rules and regulations of Singapore. On the other hand it is part of a bigger organization - CSPB.

CSPB has established brand equity for managing clients' assets efficiently . This work ethic of efficiency and quality service is well embedded in all CSPB subsidiaries. Additionally, being a Swiss bank, it is accustomed to offering confidentiality to its clients. This is after ensuring that there is no money laundering or other illegality involved. Alex W. Widmer, Head of CSPB for Asia-Pacific, Middle East, Egypt, Greece and Turkey, comments:

To ensure that the integrity of CSPB values are not compromised, the offshore branches are headed by an individual who has been working with CSPB for quite some years . I think it is important that the person understands the way we operate the business, the way we are organized, and to see that the branch meshes in with CSPB, since it has to work well with all units of the organization. All offshore operations are interlinked with the global network in a way that does not apply to onshore banks.

Singapore is currently emerging as a preferred destination for offshore banks. Arguably it is beginning to steal a march over Switzerland, Luxembourg and Hong Kong, the other locations in the FSF Group I Category. Hong Kong is now perceived as being part of China. Switzerland and Luxembourg are currently under pressure from the European Union (EU) to improve transparency and financial supervision. Both countries are being encouraged to adopt measures that will allow for greater information exchange and disclosure, in such areas as tax policy and investment. This will mean that both countries will become less attractive as offshore banking centres.

By contrast, Singapore has a banking law that allows for client confidentiality of the highest order. Hence, to continue as a force to reckon with, CSPB is seeking to strengthen its position in Singapore, the emerging prime offshore banking operation of the world. To this end, it has recently opened the Global Private Banking Centre, Singapore. The services it offers are new and an innovation on the part of CSPB.

The Global Private Banking Centre, Singapore offers its clients global and full access to the entire product range of the Credit Suisse Group, all day (24 hours) every day. Thus, Singapore clients can seamlessly access CSPB services through a number of different channels at any time and from any location. This makes possible a real-time posting of assets and transactions, dispensing with the time zone problems inherent in traditional services. This is enabled by the integration of all channels of access, whether telephone, Internet or personal visits .

This innovative feature is made possible because the Centre has incorporated an e-commerce platform for its operations, the first in the realm of international offshore private banking. Traditionally, clients in a region such as Europe experienced difficulty in assessing banking facilities in Singapore during the latter's office hours, because of the six to eight hour time difference. If a client in Europe wanted to talk on the phone to a manager from a bank in Singapore, he or she had a time window of just two to three hours. To overcome this limitation, in addition to the e-commerce platform, CSPB Singapore has a 24- hour call centre. This feature is supplemented by an all-day videoconferencing facility. A multilingual banking team staffs these communication channels. Hence, a client can access his or her portfolio by communicating in the international language of his or her choice.

Alternatively, clients can pursue the conventional approach of physically visiting the call centre and transacting business on a face-to-face basis with their relationship managers. What clients are looking for is a bank like CSPB, which has an established reputation for giving a high return on investment, and is also conversant with Singaporean banking regulations.

Clients can be assured of efficiency vis-  -vis the management of their portfolios, regardless of whether they are parking their assets as offshore clients with CSPB Zurich, CSPB Bahamas or CSPB Singapore. However, they are likely to prefer banking with CSPB Singapore because it is emerging as the location that can afford the greatest degree of confidentiality and security in the world. CSPB has rushed to make CSPB Singapore the most attractive private bank for offshore clients the world over. This has been CSPB Singapore's response to the fierce competition that exists in the banking sector in Singapore. Singapore has a population of just 3.2 million (1999), but has 661 financial institutions. Of these, 83 are offshore banks. They are all banks of note and repute, but they have been pipped to the post by CSPB.

Side-by-side with this innovation, CSPB Singapore has been concentrating on optimizing its strengths in relationship banking. What CSPB has done is to juxtapose a Swiss banking system, with its 150 year established brand equity for excellence, with a location that is now emerging as the preeminent centre for offshore banking. CSPB has been present in Singapore since 1971. It is therefore fully conversant with Singapore banking regulations. It is in a position to offer premium services at a premium location. In other words, it has married its expertise in private banking with Singapore's capability for providing the best climate for financial operations.

Organizational structure

A CSPB project team is developing the Global Private Banking Centre (GPBC), Singapore. Boris Collardi, a 27-year-old whiz kid, heads the project, identified by the codename Project Copernicus. The project team comprises 130 individuals with 19 to 20 different nationalities. Some of these individuals have been with CSPB for years; others have just joined. The team is remarkable because the organizational structure is what Peters and Waterman (1982) have described as 'loosely coupled '. The team is not hierarchically ordained and all members are on an equal footing. Collardi is a first among equals.

The team members are without exception top- notch professionals. They function as peers with mutual respect. As a result, it is peer pressure that drives performance. This is something of a departure from the traditional mode of CSPB functioning, as exemplified by its headquarters in Zurich. The Zurich headquarters has a well defined, almost bureaucratic structure, in keeping with the nature of its operations.

The Copernicus project team is attempting to deliver and operationalize the GPBC as a world-class system, as quickly as possible. The team does not have a tried and tested blueprint to refer to. Any member of the team can advance solutions to problems. The work thus necessitates that hierarchies and strict reporting lines are dispensed with.

The Copernicus project has gone beyond the 'Swiss efficiency' model mirrored by the CSPB Headquarters, Zurich. These features guarantee that all the organizational members understand their roles, have the competence to discharge their responsibilities well, and therefore do so. The system functions like a well-oiled machine, with every member being like a well-oiled part of that machine. Members have designated roles, but these roles are frequently exchanged, enlarged and shared. This flexibility regarding roles is enabling the project to be creative.

The structure at the Copernicus project has enough flexibility to allow changes in role content. This flexibility also allows the structure to evolve . The Copernicus project thus operates as a learning organization. And as in any organization, interpersonal differences can surface. Collardi observes that 'culture is only one of the factors determining professional behaviour. . . the other factors could be personality, exposure, education, family background, individual attributes, etc'. The non-cultural factors such as education and exposure have ensured that all organizational members share the same work ethic. The learning organization environment encourages members to be tolerant of and learn from other cultures. Comments Collardi:

The founding principles of working in such an environment are as follows :

1. lead by example (show/share/teach/etc);

2. transparent communication;

3. commitment/motivation (recognition);

4. ownership and responsibility;

5. empowerment of the staff.

The CSPB as a global enterprise has an orientation that enables it to be global when necessary, and local at other times. When the GPBC Singapore interacts with other CSPB branches, it does so in the established CSPB Zurich mode, but as a unit it has its own characteristics. 'We think global - act local,' explains Collardi.

A noteworthy feature about CSPB as a global concern operating in different cultures has been its ability to appreciate the opportunities that other countries can offer. Until now it developed innovative approaches in Switzerland, then exported these approaches to its branches around the world. Now it is developing the GPBC through the Copernicus project out of Singapore. It is accepting that Singapore is likely to replace Switzerland (and Luxembourg and Hong Kong) as the preferred place for their clients to bank their assets. Its networked organizational structure is not usually associated with mega banks, but this structure has contributed to CSPB's success in no small measure. Additionally, because of the way CSPB has evolved, every corporate entity has sufficient autonomy to design a structure that fulfils its objectives.

The Copernicus project is divided into several streams. These are the Business Development Stream, IT Stream, E-Commerce Platform Stream, Marketing Stream and Legal Compliance Stream. The Business Development Stream is responsible for developing a new concept. For instance, it developed the concept of a seamless 24-hour continuous access facility for customers. The concept was then examined by the Legal Compliance Stream to ascertain whether it was in accord with Singapore's banking regulations and laws. The concept was simultaneously examined by the Marketing Stream to ensure that it would find acceptance and favour by clients. It was then handed over to the IT Stream and E-Commerce Platform Stream for operationalization . In reality, the flow is not quite as unidirectional as described above. From initiation to project completion, there is tremendous interface and exchange of ideas between the streams. This is formally facilitated by what Collardi has termed Monday meetings. At these meetings, which can stretch for six hours, the streams report to each other on the progress they have made.

Members of the Copernicus project are encouraged to develop either as managers or leaders. As the terms are used in the Copernicus project, managers are individuals with consummate technical skills. Leaders, by contrast, display such attributes as being able to take the initiative, or coordinate the activities of project members. Ideally, members are encouraged to be both managers and leaders . In practice, the Copernicus project has observed that people have inclinations towards one role or the other. People who do not evolve as either managers or leaders are perceived as misfits, who are then eased out.

This structure has encouraged tremendous creativity and job satisfaction amongst members. Members who make outstanding contributions are suitably rewarded. The reward could be a message of appreciation sent by e-mail by Collardi and project colleagues. It could be applause at Monday meetings. It could also be a financial reward.

Generally, the multicultural mix of the project is not an issue, because all members are professionals who fit into the culture of the project. However, cultural differences are discernible when differences of opinion manifest themselves . For instance, members are expected to be forthright in giving their views on projects and to speak their minds. However, a newly joined IT expert who was Chinese never expressed a candid opinion that a concept was not worth pursuing at Monday meetings, but he would unilaterally decide not to work on a concept if he was convinced that it was not going to work. Initially his behaviour was construed as mystifying, almost rebellious. He was therefore asked why he did not publicly voice his aversions to specific concepts when they came up for discussion. After he explained his rationale, it became apparent that at Monday meetings, his behaviour was influenced by traditional Chinese values. Traditionally, the Chinese do not like to publicly criticize a colleague. They want to ensure that the person being criticized does not lose face.

Collardi therefore worked on the Chinese IT specialist's attitude in this respect, and convinced him that at Project Copernicus he was expected to express his views honestly, and that no one would take offence or lose face. They would in fact feel uncomfortable if they could not fathom his true reactions to a concept. After some counselling, the Chinese IT expert is voicing his opinions at project meetings. That he does so in a tactful and non- threatening fashion is particularly well appreciated. In fact now Collardi believes that project members who aggressively present their viewpoints could learn something from the Chinese IT expert about being diplomatic.

The experience of CS Singapore's Copernicus project suggests that even banks can successfully opt for innovative and organic modes of functioning. The networked structure at CS allows members to access each other's ideas with ease. This structure totally dispenses with the debilitating effects of hierarchies. Members interact with each other laterally. As has already been mentioned, these members are highly qualified and dedicated professionals. They are what Collardi describes as 'best of breed'. They are not only extremely talented, but have potential as either managers or leaders. It is this professionalism that is holding all members together, irrespective of cultural background. They also have sizeable amounts of task-orientation. There is something in their background which has enabled them to emerge as professionals. All these features working in synergy encourage the unleashing of considerable amounts of creativity.

CASE DISCUSSION QUESTIONS

1. What lessons about organizational structure and intercultural management can be derived from the case study?

2. Comment on Boris Collardi's leadership style and skills in intercultural management.

3. What aspects of CSPB Singapore can be replicated to branches of CSPB in other parts of the world, such as CSPB Zurich?

4. Does Boris Collardi have a vision for his intercultural team?

5. Why is there a certain amount of bonding amongst members in his team, despite its intercultural mix?

Inferences

The following may be inferred about organizational structure and intercultural management.

The importance of helping personnel on a case-by-case basis to overcome cultural impediments

There are several reasons why competent and qualified individuals may experience difficulty in getting assimilated into an unconventional organizational structure. One reason could be culture. In this book we are examining only the effect of culture and ignoring other reasons. In what way might culture act as an inhibitor to getting personnel aligned with organizational structure?

An innovative project team, like that for the Copernicus project, comprises members from diverse cultural backgrounds, both ethnic and corporate. When it is observed that the cultural background is at odds with the required work behaviour, it may be necessary to address this issue head-on. As has been detailed, this was done at the Copernicus project with respect to the Chinese IT expert. However, it must be pointed out that individuals need to be assessed to see if culture is an impediment on a strictly case-by-case basis. Thus, what was true of the Chinese expert referred to earlier might not hold for another Chinese IT expert who joins Project Copernicus.

Considerable research in the area of learning organizations suggests that such organizations succeed when the structure is flexible enough to permit continuous assessment. Continuous assessment at the micro level is also what characterizes intercultural management. Hence a cultural impediment that is found to inhibit the work behaviour of a person from one ethnic group need not apply to somebody else from that same ethnic group. A networked structure is compatible with this notion that every project team member must be viewed as having unique attributes. It therefore has to be free of too many standard operating procedures. Excessive standard operating procedures obstruct the creative process, as research has established. A rigid system also reduces individual uniqueness by expecting everybody to fall in line with established norms and codes of conduct.

The Copernicus project has maintained continuous vigilance for signs of strain in interpersonal relations. Right from the time a person joins the team, project members are alert to whether strains could arise because of culture. The following incident illustrates this. In early 2000, a German joined the Copernicus project. He hailed from a typically German corporate culture where there existed considerable rules, regulations and standard operating procedures. The structure in that corporation was authoritarian, with a well-defined hierarchy. He was accustomed to being given detailed instructions, and functioning in an unambiguous environment. Collardi and others therefore anticipated that unless he was initiated into the project team culture appropriately, given counselling and mentoring, he would be a cultural misfit. He was coached extensively from the minute he joined the Copernicus project about its norms of work behaviour. After just one month, the German adapted to his new work environment completely and became reasonably comfortable with the prevailing networked structure.

The project team frequently undertake group outings. This enables them to develop a sense of belonging to their team, in which spirit overrides differences of culture, personality type, and so on. On 29 March 2001 all members of the team congregated on a boat, and spent the entire afternoon cruising off the coast of Singapore. On this occasion, Andr Keel, Head of New Technology, expressed how comfortable he now felt with his associates at Project Copernicus. He admitted that he had made some mistakes initially when he had joined the project group a year earlier, but had learnt to be more sensitive to the sensibilities of people, especially those from cultures different from his own. This learning was possible, Keel averred, because the structure at Project Copernicus was designed to integrate people into its cultural melting pot as speedily as possible. In fact, an important criterion in performance appraisal is cultural fit. It is not just a question of whether a person like Keel learnt to fit into Project Copernicus. It is also a question of whether his colleagues and superiors contributed to and facilitated his adjustment.

Keel, a Swiss-German, had worked with Credit Suisse Zurich for a year, before joining the Project Copernicus team in Singapore. Before joining Credit Suisse he had worked with construction companies for many years, first in Uganda and then in Iraq, where the company he worked for built hospitals . While working for these companies, Keel had been accustomed to cracking the whip. He would speak in a rude, almost offensive way to his subordinates , to extract work from them. When Keel came on board Project Copernicus, the Asians working there, particularly the Singapore-Chinese, perceived him as lacking in refinement. The US managers working with Project Copernicus had no difficulty cutting Keel down to size . However, some of the Asians found it difficult to counter his tough posturing with reciprocal toughness. They frequently took recourse to complaining about Keel to Collardi. For some Asians, this is a preferred method of dealing with interpersonal conflict: taking the matter to a higher-up.

Keel was personally mentored and counselled by Collardi. He was even sent to a leadership training course where among other things he was exposed to the rudiments of intercultural competencies. Keel made a conscious effort to align himself with his team members, and over time he succeeded in being not only less offensive, but likeable and popular. Some of the Asians who had been most disconcerted by Keel were encouraged to meet him head on. Thus the Asians were encouraged to assume a more direct role in dealing with difficult colleagues, rather than depend on their boss to intervene on their behalf .

It is said about Asians that they expect authority figures to sort out their on-the-job interpersonal problems. This generalization is something of a caricature. Most of the Asians with Project Copernicus do not conform to this caricature, and the few who did have been weaned away from this tendency. When they conveyed to Collardi that they were not happy with something their boss had done, Collardi would respond, 'Why do you not approach the boss directly?' They would feel awkward about approaching their bosses directly, but they tried out Collardi's suggestion. Meanwhile, Collardi would speak with the bosses so that they could prepare to receive feedback from their subordinates. When the subordinates met their bosses, they would find themselves being received with an open mind, and given a fair hearing. This then encouraged them to sort out matters directly with their bosses, or any other coworkers with whom they had a difference of opinion. Such directness is required for an open environment to thrive. And the open nature of the structure facilitates such face-to-face settling of differences of opinion.

The flexibility inherent in Project Copernicus serves several purposes. Most of all, it enables people to blend into a multicultural team as efficiently as possible. It also places part of the onus of achieving integration into an intercultural environment on the individual managers who have joined Project Copernicus. Considerable effort has been expended in crafting a structure that will facilitate the integration. However, as the maxim states, you can lead a horse to water, but you cannot make it drink. If a manager is essentially lacking in intercultural skills, and more importantly is lacking in the willingness to cultivate those skills, he or she will not become a part of the intercultural mosaic of Project Copernicus. In 2001, a Mauritius-Chinese was recruited. He had 22 years of experience in the banking sector, but he was encouraged to leave Project Copernicus after four months. The reason was that his colleagues rejected him because he had the attitudinal problem of not wanting to learn how to work at the project. The structure requires members to be proactive in achieving a fit with the project culture, as well as in feeling comfortable working with colleagues from other cultures.

Johan, Head of the Call Centre, who was also recruited in 2001, is an example of a person who aligned himself remarkably speedily with the intercultural environment at Project Copernicus. Prior to joining Project Copernicus, Johan had worked for DLG, a US company, which became a Credit Suisse entity in 1999. Johan had imbibed some aspects of the US culture by virtue of having worked for DLG, and also possessed certain typically German attributes, since that was his nationality . The 'Americanness' of Johan's background was reflected in the fact that he was open-minded, prepared to listen, proactive and bottom line-oriented. His German upbringing had given him a structured approach and a capacity for attention to detail. This type of exposure and familiarity with more than one culture is what Collardi seeks when he recruits people. He therefore hunted Johan and spoke with him on the telephone for 10 minutes. By then, Johan had decided that he would like to join Project Copernicus because he was impressed by the structure that was in place there.