E FFECTS OF STANDARDIZATION IN THE FINANCIAL INDUSTRY

E FFECTS OF STANDARDIZATION IN THE FINANCIAL INDUSTRY

“Impact of standardization on job perception of investment advisors”

JASPER LABOHM (1679562) E-mail: j.h.labohm@student.rug.nl Jacob van der Borchstraat 28, 3515 XE, Utrecht

Tel.: 06-28728936

Research supervisor: Dr. K. Prins Secondary supervisor: Dr. J. Rupert Company supervisors: B. Homan & L. de Burlet

August, 2012

Faculty of Economics and Business

A BSTRACT

In this research, an insight is given into the effect of standardization on job perceptions in the financial industry. The effects of the impact of standardization on the individuals’ job perception was assessed by looking at five variables of job perception: job efficiency, job performance, task variety, job enrichment, and job satisfaction.

Based on a qualitative research design (N=35) it can be concluded that standardization

has a great impact on the job perception. In general this research does not comply with the

literature on the variable of job performance (high level of impact of standardization leads to

high level of job performance), and only partially complied with the variable of job efficiency

(high level of impact of standardization leads to high level of job efficiency). However,

support is found in both literature and this research for a negative effect of standardization on

job enrichment and job satisfaction. Practical implications of this study and further

suggestions for research are presented.

T ABLE OF C ONTENTS

Blz.

1. Introduction 4

1.1 Management problem 4

1.2 Description of the organization 5

1.3 Case description 6

1.4 Research question 7

2. Theory 8

2.1 Effects of the standardization 9

2.1.1 Job Efficiency 9

2.1.2 Individual Performance 10

2.1.3 Task Variety 11

2.1.4 Job Enrichment 12

2.1.5 Job Satisfaction 13

2.2 Conceptual model 14

3. Research design 15

3.1 Methodology 15

3.2 Data collection 16

3.3 Data analysis 17

4. Results 19

4.1 Impact of the standardization 19

4.2 Job Efficiency 20

4.3 Individual Performance 22

4.4 Task Variety 23

4.5 Job Enrichment 24

4.6 Job Satisfaction 26

5. Discussion 28

5.1 Conclusions 28

5.2 Practical Implications 30

5.3 Limitations and Future Research 31

References 32

Appendices

Appendix A. Organizational structure ING NL 35

Appendix B. Interview transcript 36

Appendix C. Observation scheme 37

1. I NTRODUCTION

The standardization of business processes is an ongoing trend for decades now which, most recently, has made its introduction in the financial industry. The financial industry, and specifically, the investment advising services, can be characterized as knowledge intensive and was therefore safeguarded from standardization for a long time. However, recent events show an upcoming trend in standardizing investment advising services, offered by retail banks. This standardization has an impact on the companies involved, especially on the work experience of employees confronted with this transition. This paper aims to research the impact that standardization has on the individual job perception. This will be done by a case study on the recent standardization of the investment advising services of ING, a major retail bank in the Netherlands.

In this chapter, the subject of this research will be laid out. First, the management problem of the change case at ING will be laid out. Hereafter, a description will be given of the organization of ING, as well as the immediate cause of the changes. Next, the organization will be described, as well as the relevant actors and departments for this research. The final paragraph of this chapter will deal with the converging of the management question into a set of research questions.

1.1 Management problem

At ING, changes from a decentralized investment advising policy to a centralized and standardized investment policy were implemented to reach a set of goals. The new policy was aimed at improving the risk management of investment advising, and at improving the efficiency of the investment services to clients and advisors. As a side goal, ING wanted advisors to be able to operate more commercially. With this research, ING wants to evaluate the success of the changes. Subsequently, this leads to the following question:

“In what order did the new investment strategy enabled investment advisors to operate more efficiently and to perform more commercially?”

In the next paragraph a description of the organization will be given, including the most

important stakeholders in this research.

1.2 Description of the organization

ING is a global financial institution of Dutch origin offering banking, investments, life insurance and retirement services. With more than 104,000 employees ING serves over 85 million customers in over 40 countries in Europe, North America and Latin America, Asia and Australia. In the Netherlands, ING is one of the leading financial institutions serving over 8,9 million clients ¹ . An organizational structure of ING in the Netherlands (this research is limited to the Dutch market of ING) can be found in the appendix ² . Below in Figure 1. the organizational structure, relevant to this research is shown.

Fig 1. Organizational structure Private Banking & Investments

The departments or groups of advisors within this structure that have a stake in this research, or participated in it, are: Investment Office, Portfolio Management, Investment Engineers, Wealth Management, Private Banking, and Personal Banking. The effects of the changes differ between these departments, because of the different backgrounds of these departments, and because of the different clients that each department serves. Next to the departments within the organizational structure, the departments of Product Management, Formule Management, and Marketing are involved in this research, because of their role in

1

This information about ING is obtained from the websites www.ing.nl and www.ing.com.

2

See appendix A. Organizational structure ING NL

Business &

Formule management Sales Private Banking & Beleggen

Personal Banking Wealth

Management Risk Office Secretariaat

Private Banking Regio 1 t/m 4

Werkgebied 1 t/m 18

Mid Offices

Financial Planners

Regio 1 t/m 7

Formule management

Business management

Financial Engineers Wealth Managers

Mid Office

Private Banking & Beleggen

Marketing PM Beleggen

Mid Office

Portfolio- management &

Trading

Werkgebied 1 t/m 4

Tradingdesk

Investment Engineers Consultants

Duurzaam

Investment

Office

the making, communicating, or executing of the investment policy. In the research design of this paper, the role of these departments in this research is explained. In the next paragraph, a complete description of the case, used for this research, will be given.

1.3 Case description

In 2009, the Dutch banks, Postbank and ING Bank, merged into one new bank, called ING.

This merger was the largest change project in the history of the bank, and took over two years to complete. After the first process alignments, the more difficult departments and processes had to be aligned in several subprojects. One of these subprojects was the creation of one new investment policy for all ING clients, which resulted in a new department, called ING Investment Office. This department functions as a knowledge institute within ING bank, responsible for three main tasks:

 Developing a clear vision on the economic climate, including valuations of individual stocks and markets;

 Designing and maintaining several standardized investment portfolios for all client segments;

 Executing additional, customized investment services for high profile investment clients.

The department has functioned for three years now, and for two years, the current design of investment portfolios ³ is functioning. The investment portfolios under research are standardized portfolios, composed of different assets, regions, and themes. A client that chooses to invest with advice from ING, or chooses to place his investments under management of ING, will ultimately invest in one of these standardized investment portfolios.

This standardization of investment portfolios has far reaching consequences for investment advisors of ING. Moreover, the role of an investment advisor at ING has changed from an expert in investments to that of relationship manager. These advisors usually made their own economic analysis, and based upon that, made their own investment proposals to their clients. With the standardization, advices to clients are now designed by the Investment Office, and are passed on by the investment advisors to the end client. For their new role as relationship manager, advisors now have to deal with a wider scope of products, targets, and administrative tasks. This has major effects on how advisors perceived their jobs, and subsequently, how they performed on their jobs. This research is designed to investigate

3

An investment portfolio is a collection of assets owned by an investor.

several effects of the changes in the investment policy at ING. In the next paragraph the research question will be presented.

1.4 Research question

The goal of this paper is to make an analysis on the impact of standardization in an investment advising policy. In the research question and research design the job perception of an individual investment advisor will be the main focus of analysis. This paper makes an effort to answer the following research question:

“What is the impact of standardization of processes within a financial institution on the job perception of investment advisors?”

In the next chapter the theoretical framework, as well as the sub questions will be presented.

Together with the research question, they will form the basis of a conceptual model presented

at the end of the chapter.

2. T HEORY

This paper focuses on how investment advisors perceive their jobs now, in comparison with their job design of before the change. This major change can be best described and summarized with the term ‘standardization’. However, standardization is a concept on itself which also has developed over the years. For instance, the original concept derived from the work of Taylor (1911) is less applicable to this research, because it focuses solely on the routinization of technical processes. The following definition of Dalton, Todor, Spendolini, Fielding, and Porter (1980) seems more applicable: “Standardization refers to the degree to which an organization strives for uniformity by having standards to which its processes and outcomes conform”. In addition, a level of impact of the standardization has been chosen to take into account the differences between the advisors and their backgrounds. This level of impact is the advisor’s evaluation of the impact of the standardization on how he perceives his job. This way, the research will give more meaning to the effect that standardization has on the job perception of employees in the financial sector.

To give a clear insight on how the term job perception is used in this research, this concept will now be explained. Job perception is defined by Law and Wong (1999) as the overall perception of the task variety, task significance, task identity, autonomy, and feedback. These five job characteristics were adopted from the Job Characteristics Model of Hackman and Oldham (1976, 1980), which relates these characteristics primarily to the concept of job satisfaction. However, this research aims at a broader notion of job perception, and therefore chooses not to focus only on the characteristics from the Job Characteristics Model. Instead it focuses on the outcomes and effects of the changes at the case at hand.

Therefore, five characteristics will be researched as effects of the changes at ING, namely:

individual performance, job efficiency, task variety, job enrichment, and job satisfaction.

These characteristics were chosen because they are most relevant to the specific case study,

especially to the goals that were set up for the changes at ING. The focus of the change was to

reach more efficiency, which enables a better personal performance. A better organized and

performing job will cause employees to notice higher levels of task variety and job

enrichment. This would lead then to a higher level job of satisfaction. Moreover, these

variables were chosen because they present a clear picture on whether the changes caused

better performing employees for the organization and the employees’ evaluation of these

changes.

These effects will now be defined and conceptualized to link them into one conceptual model. Due the type of research used in this paper, for each effect an open research question will be formulated.

2.1 Effects of the standardization

In the next sub paragraphs each effect will be conceptualized. The chosen order represents the desired chain of effects of the changes at the case at ING. The first, job efficiency was the primary goal of the change.

2.1.1 Job Efficiency

Job efficiency has mostly been researched in the light of technical processes (Scholz-Reiter, Krohne, Leng, & Höhns, 2007), but can also be measured as a characteristic of job performance (Cheng et al., 2007; Gilson, et al., 2008). Recently, the relationship between standardization and job efficiency has been researched in a broader organizational perspective (Hall, 2004). Another perspective that has been developed over the years is the employees’

personal assessment on job efficiency. In other words, what an employee experiences as being efficient. As Vroom (1964) already indicated, the expectations of an employee about their job, including how efficient they are at it, can influence how they perceive their job and vice versa. In that line of reasoning, this research will cover the employees’ evaluation of the efficiency of their work processes.

In general, the impact of standardization on the job perception and employees’ attitude is believed to be great (Dalton, et al., 1980; Law & Wong, 1999). Especially on technical matters, for instance job efficiency, a high level of impact should lead to a higher level of efficiency (Taylor, 1911; March, 1991; Dean & Bowen, 1994; Cheng et al., 2007; Gilson, Mathieu, Shalley, & Rudy, 2008; Gilson, et al., 2008). The literature suggests that the impact on this variable should be high, because standardization simplifies tasks which increases the level of expertise of the employee conducting the task. This means that employees can produce better and more quality work, which increases the overall job efficiency. To research the effect that standardization has on efficiency, the following research question will be answered in this paper:

Q2: What is the effect of the level of impact of standardization on the job efficiency?

To see whether next to job efficiency, standardization will also lead to higher individual performance, the latter term will now be conceptualized.

2.1.2 Individual Performance

Individual job performance can be defined as a dynamic performance criterion: performance of workers change of time as they learn and develop on the job (Sturman, Cheramie &

Cashen, 2005). Job performance of investment advisors, in the context of this research, will be measured as a development in performance on the individuals’ professional targets. This research will look at what influences the individual performance. In the past decades, several studies in this field have been done, focusing on a broad area of relationships, such as satisfaction, social networks, employees’ character (Vroom, 1964; Hackman & Oldam, 1976;

Schmitt et al., 1978, Petty, McGee, & Cavender, 1984; Wong et al., 1998; Sparrowe, Liden, Wayne, & Maria, 2001; Thoresen, Bradley, Bliese, & Thoresen 2004; Cheng, Li, and Fox, 2007). The relationship between standardization and performance is also a field in which several studies have been done (March, 1991; Dean & Bowen, 1994; Gilson, Mathieu, Shalley, & Rudy, 2008). Support for a hypothesis on the positive correlation between standardization and performance has been found in several settings (Hackman & Oldam, 1976; Vogus & Welbourne, 2003). This correlation exists because standardization generates positive work output behavior, like efficiency and expertise, which lead to a better performance. However, little research has been conducted on the effects of standardization on the individual performance in the financial industry.

Job performance is often seen as technical output variables of a work design. A high impact of standardization should in this variable also lead to a higher level of performance (March, 1991; Dean & Bowen, 1994; Cheng et al., 2007; Gilson, Mathieu, Shalley, & Rudy, 2008). This effect will show because employees will be able to work more efficiently due to the standardization. Because employees work more efficiently, they will have more chance to deliver more output and of better quality, hence their level of job performance will be higher.

This paper will try to explain what these effects are by answering the following research question:

Q1: What is the effect of the level of impact of standardization on the perceived individual

performance?

After establishing the effect of standardization on the job performance, this paper will then focus on job enrichment and task variety, starting with the latter. This concept will now be defined and conceptualized.

2.1.3 Task Variety

Task variety, as introduced in the model of Hackman and Oldham (1976), measures the change in level of varied tasks which are needed to perform individually. An analysis on the Job Characteristic Model, made by Devaro, Li, and Brookshire (2007), provides task variety with the following definition: “Task variety is the extent to which a job utilizes and challenges the workers’ skill and abilities”. With their research support is found for the positive relationship between task variety and individual performance. In their approach, they use a combination of the perspective of the company and the perspective of the employee. Similar to this research, this will give a broader notion of the influence on the work experience and outcome. However, mixing this perspective with the concept, like the change in standardization in this paper, has not been part of research yet.

A high impact of the standardization will mean that task variety will decrease. This means that an employee has less different tasks to or that the variance between these tasks will decrease. The correlation between standardization and task variety exists because standardization often causes tasks to be merged, or to be automated, which results in less variety of tasks to do for the same employee.

Effects of this variable can be that jobs are perceived as more monotonous, but also that performance will increase, because employees are more able to specialize in certain tasks.

In the theory of Devaro, Li, and Brookshire (2007) this negative relationship between the task variety and job performance was supported. To investigate the effects of the level of standardization on the task variety, this paper will answer the following research question:

Q3: What is the effect of the level of impact of standardization on the task variety?

Another important effect of the standardization is the effect on the job enrichment, this will

now be explained.

2.1.4 Job Enrichment

Job enrichment is a broad concept which measures a wide scope of job-related characteristics.

In general, job enrichment is a measurement of characteristics that give an extra dimension to a job (Lapierre, Hacket & Taggar, 2006). Examples of these characteristics are skill variety, number of tasks, autonomy, and feedback. Other factors, for instance the Leader-Member Exchange (LMX), can also have an influence on the employees’ perception of the situation, especially in a changing situation. (Shalley, Gilson, & Blum, 2009; Ariani, 2012). This theory states that the relationship between a leader and a subordinate is determinant in the subordinates’ perspective on factors like job enrichment.

The impact of standardization on job enrichment has started to be identified by researches from the Hawthorne Studies (McQuarrie, 2005). Since then, the literature has richly developed and the most common view is that standardization correlates with a lower level of job enrichment (Hackman & Oldham, 1976; Price, 1997; Becker; 2004; Bozionelos &

Kostopoulos, 2010; Krasman, 2011). The explanation for this lower level of job enrichment can be found in the fact that employees experience standardization as an infringement of their autonomy and that it lowers the task variety of their job.

However, there is research that proposes a different effect of standardization. Morris and Venkatesh (2010) found that when standardization has led to a higher performance, it could also increase the job satisfaction. In this research we expect that standardization will lead to employees who feel that their job is more monotonous and therefore less enriched.

This paper takes all these factors into account and, based on the individual’s perspective, researches what the influence on their perception is when their job is more standardized. This will be done by answering the following research question.

Q4: What is the effect of the level of impact of standardization on the job enrichment?

The final variable is job satisfaction, which is an important factor and effect of

standardization. In the next sub paragraph this concept will be explained and the relationship

with standardization will be conceptualized.

2.1.5 Job Satisfaction

Job satisfaction, in the context of this research, can best be defined as “an individual’s subjective evaluation of his or her work experiences” (Bozionelos & Kostopoulos, 2010).

This evaluation depends on the assessment of a number of extrinsic (e.g., financial rewards, career development) and intrinsic (e.g., autonomy, significance, challenge) aspects of the job.

As mentioned earlier, a lot of factors influence job satisfaction. In the literature, much support is found for the statement that routinization or standardization has a negative influence on job satisfaction (Price, 1997; Becker; 2004; Krasman, 2011). This influence is caused by a drop in the intrinsic motivation of the job: less experienced autonomy, significance and challenge.

This paper will test this notion from an employees’ view in a changing situation. To see whether the entire change has the same kind of influence it is important to look also at other influences on job satisfaction. Morris & Venkatesh (2010) argue that job satisfaction is also connected with job commitment, turnover intentions, and job performance. Ang and Slaughter (2001) go even further and suggest that any change in one’s job will likely have an influence on job attitudes.

As was described above, a high impact of standardization will in the end lead to a lower job satisfaction. By simplifying and minimizing the task that the job consists of, employees will feel that their job is less enriched as before and less challenging to their competencies, and therefore will cause a lower level of job satisfaction.

This paper will investigate how standardization effects the employees’ job satisfaction, and takes into account the above mentioned influences. This will be done by answering the following research question:

Q5: What is the effect of the level of impact of standardization on the job satisfaction?

Each variable is now defined and conceptualized. In the next paragraph the concepts will be

visualized in a conceptual model.

Level of impact of the standardization

2.2 Conceptual model

In this research the impact of standardization in the financial industry will be investigated. In the above described sub questions the concept of standardization is broken down to be able to describe the specific influences and effects of the case at ING. Figure 1 shows a conceptual model where the linkages between the research questions are visualized.

Job enrichment

Job performance

Task variety

Fig 2. Conceptual model

Job efficiency

Job

satisfaction

3. R ESEARCH DESIGN

This chapter elaborates on the design of this research. First, the methodology will be discussed. Hereafter, the data collection will be elaborated on, including the different sources of data and the setup of the interviews. Finally, the data analysis will explain how the data will be presented in the results, and subsequently, how it will reflect in the conclusions of this research.

3.1 Methodology

This research will be based on a qualitative approach to analyze the effects of a major change in the ING investment policy. During this research different types of sources and data collection methods were used. These methods are:

 Semi-structured interviews,

 Observation analysis of interdisciplinary meetings.

In the data collection section, these sources will be further elaborated on. The semi-structured interviews are used in this research to give direct answers to the research questions. These research questions were designed on the basis of a theoretical analysis on job perception and to give answer to the management question.

Representativeness

To create a multi-perspective view and to make this research more reliable, advisors were selected from different ranks, seniority, and regions. For this research 35 interviews with advisors were held, were conducted face-to-face and on-site, and lasted for approximately one hour. Below, some facts of the sample and the population are presented in figure 3.

Sample of the advisors Entire population

Gender Male 30 (24%) 125

Female 5 (17%) 30

Seniority Junior advisor 19 (26%) 72

Senior advisor 8 (19%) 42

Rayon manager 5 (17%) 30

Region manager 3 (27%) 11

Client segment Personal Banking advisor 15 (17%) 90

Private Banking advisor 8 (27%) 30

Portfolio manager 8 (29%) 28

Investment engineer 2 (29%) 7

Region North 7 (20%) 35

East 8 (25%) 32

South 6 (20%) 30

West 14 (24%) 58

Fig 3. Profile of the advisors

Types of advisors

As discussed in the description of the organization, this research has a focus on multiple groups of advisors. Within ING, clients are divided into segments depending on their wealth and income. Each segment offers its own type of services to their clients. This research takes into account the differences of impact effects had on each type of investment advisor. The main characteristic difference between the different types of advisors is the level of custom- made service offered to clients. Based on this criterion the following groups can be defined:

 Personal Banking advisors: low level of custom-made services

 Private Banking advisors: medium level of custom-made services

 Portfolio managers: medium level of custom-made services

 Investment engineers: high level of custom-made services

In the results section, the differences between the advisors will be analyzed to give a more precise view on the impact of standardization. Findings on this theme will also be discussed in the discussion section. In the next paragraph, an elaboration on the data collection will be presented.

3.2 Data collection

Semi-structure interviews

To get a complete overview of the effects of the new standardized investment policy, advisors

from each client segments and each district are selected to participate in this research by using

a qualitative interview. In these interviews, participants will be asked what their experiences

are with the effects as presented in the conceptual model, as well as their assessment on the influence of the new investment strategy on these effects. A transcript of the interview can be found in appendix B. Interview Transcript.

Measurement

The interview questions are derived from the research questions mentioned in the Theory chapter. Interviewees were first asked what their current assessment is on the variable in the research question. After their assessment on the current situation, employees were asked what the specific influence is of the standardization on the variable in the research question.

Observation analysis of interdisciplinary meetings

The interviews with the different advisor will present only the personal views from single employees. Therefore, a monthly interactive Client Board Group will also be considered in this research. In this Client Board Group a representation of all types of advisors, as well as seniority, and region, will participate in an interactive meeting. This platform was founded after the start of the new investment strategy to reach the following goals:

 Give the Investment Office an opportunity to present face-to-face their vision on the markets and their changes in the investment portfolios.

 Give investment advisors of all levels and regions a chance to present their ideas for the investment portfolios, as well as on the form of communication to clients.

The reason for considering this source in this research lies in the fact that this platform can function as an influence on the level of job enrichment of individual advisors. Since there are no reports being made from these meetings, an analysis of these meetings will be put on as part of the data collection. This will be done by an observation scheme, designed by the author, which can be found in appendix C. Observation scheme. With this scheme the researcher can focus on both the quantitative and qualitative input of the participants. The results of this analysis will be presented under the section ‘Job enrichment’.

3.3 Data analysis

To get into analyzing the data, each interview was first fully written down. To give answers to

the research questions, the transcripts from the interviews were then ordered by categories of

type of advisor (segment) and by variable. All answers given on each variable were then

summarized by group of variable and by group of advisors to get an overview on each effect

of the standardization. These summaries gave a clear abstract of each variable, therefore

further codification of the interviews and variables were not used. By using summaries of

each variable and each group of advisors, answers could be compared with each other, giving

a clear picture on the research question. Per variable an analysis was then made to see if there

was one unambiguous picture possible to be presented, or if there was a more divers story to

be displayed. Next, a figure was designed to present numerically the answer the research

question. Finally, a summary, some supporting and noteworthy quotes, and a conclusion were

presented to give a complete image on the variable.

4. R ESULTS

In this section the results of the different data sources will be presented. The structure from the conceptual model will be applied to each of the five effects of standardization. In every paragraph an answer to a sub question will be given in the form of a conclusion.

4.1 Impact of the standardization

Each interview started with assessing the impact that the standardization had on the advisor’s work experience. In general the standardization, and the entire change processes that came with it, had a major impact on the participants. One advisor summarized the changes by stating:

“The standardization changed the nature of my job. My role as an advisor changed from being a content expert to being a relationship manager” (advisor 8)

Six advisors used the term “account manager” to summarize their new job, meaning that they saw their role now more as a sales person for the organization. A numerical presentation of answers given by the participating advisors can be found below in figure 4.

Level of impact Number of advisors Dominant explanation

Low 4 (11%) Still a lot of autonomy left to work with

High 31 (89%) Loss of autonomy on the work content

Total sample 35

Fig 4. Level of impact

Even though the general impact of the standardization was high, differences between participants were noticeable. Especially advisors from a higher segment of clients felt less impact of the standardization. They explained this by claiming that they still experienced a lot of autonomy in providing custom-made products to their clients.

One advisor answered that he felt that standardization was only the ‘official’ policy:

“…but exceptions were still possible, however, now more depending on the thoroughness of the advisor...” (advisor 27)

They also saw the explicit difference between them and advisors from lower segments, which

did not have the same level of autonomy as they had.

Another important subject that was mentioned in every interview was the working place from home. This change was experienced as an increase in the personal flexibility and mobility. One advisor said:

“…it enables you to balance work better with a private life…” (advisor 4)

However, even this change came with a downside to some. Several participants claimed that they worked more hours now and had more difficulties shutting out thoughts and activities about work when they were at home.

Conclusion

The first research question of this paper dealt with the assessment of the impact of the standardization. From the interviews it can be concluded that there was a high impact of the standardization on the job perception of advisors. Another important conclusion that can be derived from the interviews is that the impact was reduced in case of employees with more autonomy over their work content. A third conclusion is that the change from working from an office with fixed working hours to a flexible job from home also has a major impact on the job perception, mostly positive, but also some negative effects.

4.2 Job Efficiency

Effects on efficiency can be viewed from different perspectives. From the companies’ point of

view, the work of maintaining relations with clients had become more efficient, because

several jobs had been merged into one. Another effect of standardizing the investment

portfolios and the flow of information was that a large part of the work of an advisor was now

taking out of their hands. However, from the perspective of an advisor, a lot of tasks were

new which made them believe that their jobs were not efficient. Several advisors (34%)

admitted that they were struggling with the combination of relationship management tasks

and administrative tasks. A problem which came up frequently was the lack of support by

hardware or software of the organization. The IT systems that came with the standardized

investment strategy were not functioning up to the demanding standards, resulting in time-loss

and frustration. The tasks that were previously carried out by an account manager were

difficult to combine with other responsibilities of an investment advisor. In the interviews,

several advisors (34%) admitted that they felt a gap between their possibilities and the support

of a back office or call center. This was summarized by an advisor who stated:

“I can understand how the changes are more efficient for the organization, because a lot of jobs were merged together. However, the processes of serving a client are now mostly dependable on my actions. In executing these tasks, I miss the proper tools and support of the organization to do it efficiently. Therefore I cannot agree entirely with the organization in evaluating the changes as bringing only more efficiency.” (advisor 17)

The differences in evaluations on the efficiency of the work content (substance of investment advising) and the task efficiency (executing all tasks that a job consists of) will be numerically presented below in figure 5.

Advisors’ attitudes Work content Task efficiency

Changes had a positive effect on efficiency 33 (94%) 23 (66%) Changes had a negative effect on efficiency 2 (6%) 12 (34%)

Total sample 35 35

Fig 5. Advisors’ attitudes towards efficiency

The evaluations on the work content were dominantly positive (94%) because advisors saw that the process of giving advice to clients organized from one center point was very efficient. However, they did not see their job becoming more efficient, because the gap of freedom was already filled in by the organization. Still, there are differences noticeable. A majority of advisors (66%) also saw an increase in the task efficiency. They claimed that they were better adjusted to combine new, mostly administrative tasks, with their old tasks of giving advice to clients. To summarize the gains for efficiency, an advisor stated:

“…especially the time-consuming process of generating a custom-made investment advice to every client, that was now replaced with one standardized procedure, made a huge difference in the efficiency of my work…” (advisor 23)

Conclusion

One of the main pillars of the change at ING was increasing the efficiency of the investment advising process. The interviews with advisors supported the point of view of the organization and thereby confirmed an increased efficient process of giving investment advice to clients.

However, a distinction was often made with task efficiency, a terrain where efficiency can

still be gained. It can also be concluded that efficiency has not yet been experienced by all

advisors.

4.3 Job Performance

To assess the impact of the standardization on the individual performance, the differences in starting point before the change between the different advisors should be taken into account.

Because of this distinction in backgrounds, some advisors had troubles adjusting to a standardized policy on targets whereby advisors should sell a wider scope of services. Others experienced less change, because they were used with working with targets on a wider scope of services. A major difference with the old situation is that most advisors (80%) nowadays experience that targets had become more important in the assessment of their functioning.

This resulted in a shift of focus in activities towards those activities that were evaluated in the targets. One advisor stated:

“In order to get a positive evaluation at the end of the year, all efforts must be focused on getting high scores on the targets. This has a negative effect on the day-to-day activities”

(advisor 10)

Advisors admitted that the professionalism of targets had also increased, resulting in more monitoring of activities, and more accountability on targets. A majority of the advisors (74%) admitted that they did not perform more commercially, but that their job did get more commercial. This meant that they felt that they were now judged more on their commercial results, but that they did not perform more commercially overall. One advisor stated:

“In my view, the job got a lot more commercial, but to be honest, I do not think that I operate more commercial, or that my job is more commercially attractive for my employer”

(advisor 9)

This overall evaluation is supported by the numerical presentation on the interviews below in figure 6.

Advisors’ attitudes Job is more

commercial

Growth in commercial results

Changes work positive for performance 28 (80%) 9 (26%)

Changes do not effect performance 7 (20%) 26 (74%)

Total sample 35 35

Fig 6. Advisors evaluations on changes in performance.

The numbers in figure 6 indicate that although employees do agree that their job has become more commercial, they are not seeing that in growth of their sales.

Another effect of the new investment strategy was that clients were more satisfied with the advices of ING, which made the selling of the standardized investment portfolios a lot easier. However, by formulating an inflow of clients with investment portfolios, an individual advisor had become more depending on factors outside their influence, for instance the stock climate. Some advisors doubted whether it is in the clients’ best interest that inflow into investment portfolios even was a target.

Conclusion

The assumption that standardization and a focus on a more commercial policy leads to a growth in commercial results is not supported by the interviews. On the contrary, even though the job was now experienced and evaluated as being more commercial, advisors did not see a significant growth in their commercial results.

4.4 Task variety

Since the efficiency of the job of an investment advisor had increased due to the standardization, the number of tasks has diminished accordingly. Overall, the majority of the advisors (80%) acknowledged a decrease in task variety, but an increase in effort needed for certain tasks was also reported. One advisor reported:

“… I acknowledge the decrease in task variety; a lot of tasks are taken out of my hands.

However, a lot of administrative tasks are new, and are also time-consuming. Overall I can say that my job became a bit less varied…” (advisor 31)

The preparation time for a meeting with a client had increased due to the extra IT systems an investment advisor now had to look into. The number of clients that were now being served on the same frequent level had grown, and therefore an investment advisor had more to do for the same number of clients. Also, the increased focus on targets caused more work in filling in lists for monitoring. Together with the former tasks of an account manager, this resulted in an overall increase of administrative tasks. A numerical presentation of the advisors’

evaluations on the task variety and the overall workload are shown below in figure 7.

Advisors’ attitudes Tasks of the job are less varied

The workload has diminished Changes work positive for task variety/ workload 28 (80%) 2 (6%) Changes do not effect task variety/ workload 7 (20%) 33 (94%)

Total sample 35 35

Fig 7. Advisors evaluations on changes in task variety and workload.

With higher demands on commercial results, the majority of advisors (94%) admitted that their job now demanded more than 40-hours work of them. The average hours worked was now around 50 according to the participants. Combined with a working place from, the majority of advisors continuously felt their job was not finished at the end of the day. Some advisors reported that they would like to see an increase in the number of tasks concerning commercial activities, and a decrease in the number of administrative tasks.

Conclusion

From the interviews it can be concluded that the task variety decreased as a consequence of the increased efficiency. However, overall the workload has increased with advisors reporting an average increase of 10 working hours per week. The explanation for this lies in the effort that they had to put in for certain tasks, such as administration and preparation time.

4.5 Job enrichment

In general, a majority of the advisors experienced their job now experienced as being less enriched, however there were two groups of answers recognizable in the interviews. The first group had a background in giving investment advice before the standardization; the other had a background in advising on a wider scope of products. These groups are summarized below in figure 8.

Advisor background

Experienced loss of autonomy on substance

of the product

Evaluations of lower job enrichment

Total advisors

Focus on only investments 14 (88%) 13 (81%) 16

Focus on wider scope of products 3 (16%) 9 (47%) 19

Total sample 35

Fig 8. Job enrichment

For advisors with an investment background the autonomy on the substance of the products had been replaced with a more generalist job where investments are just one of the products.

This made the job less challenging to them. In case of an advisor with a background in a wider scope of products the differences with the old job were smaller. A total of 10 advisors even admitted that they experienced advising on investments as an enrichment of their job.

Still, almost half of this group of advisors reported a low level of job enrichment. This was explained by the fact that the job of an advisor was experienced as less challenging. One advisor said:

“… due to the standardization, a lot of conceptual thinking processes were now being done for me. The old job required more autonomous thinking and decision-making. This was something that I valued greatly in my job…” (advisor 30)

The standardization has caused much resistance among advisors with an investment background, but after a certain time a majority understood and accepted the new policy.

Several advisors (30%) told about readiness for new changes in their jobs. There were several ideas proposed to make the job of an investment advisor more commercial. These ideas were proposed as a means to make their job more challenging.

Client Board Group

To analyze all the influences on job enrichment, several meetings of a client board group were attended. These meetings were attended by an average of 12 advisors. Afterwards four advisors were interviewed. From these interviews it can be concluded that the role of this platform is mostly informative for advisors. Each advisor that was interviewed confirmed this conclusion. One advisor supported this conclusion by stating:

“… I still could give input during these meetings, even on the substance of the investments.

However, the function of the platform clearly is to inform advisors about the substance and chosen strategy of the investments. Our expert opinions are appreciated, but are also less relevant due to the lack of sufficient relevant knowledge from our side…” (advisor 6)

As a consequence of their attendance they did not report any increase in their job enrichment.

They valued the existence of the platform and the meetings, but this was due to other reasons

than the influence on their job enrichment. One advisor explained this by stating:

“… by sustaining this platform, the bank actively works on the transparency of their investment advising policy. If I have to explain this policy to my clients, the bank should enable every form of information exchange between the investment office, who design the policy, and the investment advisors, who translate this policy to clients… (advisor 8)

Conclusion

Due to the standardization, a majority of advisors experience their job as less enriched. This can mainly be explained by the loss of autonomy on the substance of the products. On the other hand, advisors also experience their jobs as less challenging. Another conclusion is that the platform of the Client Board Group did not affect the level of job enrichment of the participating advisors.

4.6 Job satisfaction

Overall, the job satisfaction has decreased as a consequence of the standardization. This effect was mentioned by advisors from different backgrounds; however, there are similarities with the results on the general impact of standardization. Advisors, who reported a high impact of the standardization, reported a decrease in job satisfaction. Vice versa, advisors who reported a low impact of the standardization, reported a small increase in job satisfaction. Job satisfaction is a subject on which advisors are questioned frequently. Therefore they were willing to give this subject, and the changes in it, a grade on a scale of 1 – 10. The advisors’

evaluations will be presented numerically below in figure 9.

Level of impact

Number of advisors

Average grade before standardization

Average grade after standardization

Low 4 (11%) 7,5 8

High 31 (89%) 7,5 6

Total sample 35

Fig 9. Job satisfaction

One of the things that stand out of the data is the limited level of spread in grades given by advisors; advisors gave no lower than a 5, and no higher than an 8. Therese seems to be a high level of consensus in evaluating the impact that the standardization has on the job satisfaction.

One of the reasons for a decrease in job satisfaction that was mentioned most often

was the lack of support from IT systems. This problem came at the expense of advisors,

causing them much frustration. Another reason, mostly mentioned by advisors with an investment background, was the decrease in challenge of their job. A few advisors also mentioned the lack of career potential as a reason for their decreased job satisfaction. One advisor explained this:

“… before the changes, there were more levels of management to grow into. By diminishing these levels, it narrows my opportunities to get ahead in this company…” (advisor 2)

Reasons that the small group of advisors with an increased job satisfaction reported were that the investment portfolios were now better managed for clients, which resulted in less claims and more satisfied clients. As an effect of the more satisfied customers, advisors got more satisfied. It also gave advisors more reason to be proud on the products they were selling.

Conclusion

From the interviews it can be concluded that the job satisfaction decreased. To put it in a

grade on a scale from 1 - 10, it came from a 7,5 to a 6. The most given explanations for this

decrease were: lack of support from IT systems, the job was experienced as less challenging,

advisors experienced less career opportunities.

5. D ISCUSSION

In this research, a valuable insight is given into the effect of standardization on job perceptions in the financial industry. First a general level of impact of the standardization on the job perception was assessed. This research shows that standardization has a great impact on job perception. Employees perceive their job differently after a major change resulting in standardization. In fact, employees can even feel like they are working in a different trade as an effect of standardization. In this research the concept of job perception was then broken down into five variables, namely: job efficiency, job performance, task variety, job enrichment, and job satisfaction. In general this research does not comply with the literature on the variable of job performance (high level of impact of standardization leads to high level of job performance), and only partially complied with the variable of job efficiency (high level of impact of standardization leads to high level of job efficiency). However, support is found in both literature and this research for a negative effect of standardization on job enrichment and job satisfaction. The overall results of the impact on each variable will now be discussed and compared with the prognosis from the theory.

5.1 Conclusions

An important finding on the concept of job efficiency was the difference in perception between the organization and the advisors. Whilst the organization saw a tremendous advancement in efficiency, the employees however, did not witness the same level of progress. A distinction was often made between work content (substance of investment advising) and task efficiency (executing all tasks that a job consists of), whereby the latter was a subject where employees were still struggling with. On the work content, this research supports the theory in that standardization leads to simplification and thus to more efficiency (Dalton, et al., 1980; Law & Wong, 1999). However, employees were still struggling to translate the simplification of processes to an efficient job design. An explanation can be found in the lack of attention that was paid to how employees would have to deal with the transition in work methods.

On the variable of job performance the results of Vogus and Welbourne (2003) cannot

be supported by this research. In other words, this research no support has found that

standardization leads to a higher job performance. Employees due felt that performance was

being evaluated more professionally, but did not report a significant progress on this matter.

This can be explained by the fact that the organization expected that standardization put more focus in the working methods of the advisor. Advisors, however, saw the standardization more as a limitation to their work methods.

As a consequence of the change, the task variety decreased, however, the tasks that where left overall took more hours to complete. This result is in contradiction with the research of Devaro, Li, and Brookshire (2007), because it does not support the negative relationship between task variety and job performance that was proposed. This can be explained by the fact that because of the standardized policy in dealing with clients, advisors where now limited in spreading their time among clients. This demanded even more efficient working methods for advisors, a subject that will still take time to develop.

The effects of the standardization on the job enrichment where large, mainly due the loss of autonomy on the substance of the trade of advising on investments. It also caused advisors to experience their jobs as being less challenging. This result supports the dominant literature on this variable (Hackman & Oldham, 1976; Price, 1997; Becker; 2004; Bozionelos

& Kostopoulos, 2010; Krasman, 2011). Attempts to reduce this effect, by organizing a platform for advisors to give input to the investing policy (Client Board Group) have not yet proven to be successful. This effect seemed to be inevitable considering the high level of standardization; however, future attempts to make the job more challenging can still turn out to be fruitful.

Results on the job satisfaction painted a clear picture. The overall job satisfaction clearly had gone down as a consequence of the standardization. On a scale from 1 to 10, it had gone down from a 7,5 before the change, to a 6 after the change. This result supports the expected decreases in job satisfaction as an effect of standardization. Thereby this research supports the studies of Price (1997), Becker, (2004) and Krasman (2011). A most given explanation for this was the lack of IT systems. The organization could still make a great effort in improving on this terrain. Other reasons were a less challenging job and less experienced career opportunities. This shows the importance of presenting employees a vision and possibilities to succeed in their career.

The results of this study will also have an impact on the organization of ING and the

field in which it operates. These implications will now be dealt with.

5.2 Practical Implications

Field of industry

This research shows the importance of considering certain effects of standardization when planning the change. Goals of improving efficiency and individual performance can only be met if employees are taken along in the process. In other words, the change should bring up the same ideas in their minds, as in the minds of the designers of the change. In practice this means that the persons in charge of the change should not only assess their own goals of the change, but also should assess the goals and expectations of the people whom are responsible for the execution of the change. Another important conclusion that can be drawn from this research is that standardization can also come with negative effects on job efficiency.

Employees can experience a lower level of job efficiency and in case of ING, have to deal with longer working hours. There seems to be a misfit in the evaluation of the change on this matter between the organization and the employees. This could have been foreseen if the change had been designed and implemented with more input and commitment of the employees that had to work with the changes.

This research has shown an indication that negative effects on job enrichment and satisfaction can be reduced by giving employees some sort of autonomy, or by stimulating them to think and act outside the standards when necessary. This is something that a manager cannot organize in official procedures, but has to radiate to employees on a more personal level. This way, employees feel that they have opportunities outside of the regulated processes and that thinking outside of the box will be accepted.

ING

In case of ING, major changes like this are designed by the management, a change

management department, and an external consultancy bureau. As described above, among

these stakeholders, current employees and future employees should also be placed. This way a

misfit in expectation on the outcome can be solved from the start. The aim of the changes

should not only on technical advancement and output performance, but should also take into

account the new working methods which have to deal with the technical advancement and

that has to reach the output performance. Therefore, a change on this scale should first be

tested by a pilot group. This pilot group should design, test, and further develop the new

working methods. After fine-tuning the new job design, the rest of the employees should be

trained in working with this new job design. This training should be preceded by sessions in

which the urgency of a new way of working should be explained and where the new strategy of the organization is laid out. During and after the changes, employees should have a clear possibility to evaluate on the changes and give input for improvement. Moreover, a stringent new policy should also be coupled with room to still think and act outside the box. This all, will give employees a better position in the changes, and as an effect, will give ING a better performing workforce.

5.3 Limitations and Future Research

This research is limited to the case of ING. In standardizing its investing advising services, it is a forerunner in the financial industry in the Netherlands. It pays to do further research on future standardizations in other financial organizations. This can be done by using a more quantitative approach, so that trends can be recognized on a macro level, and organizations can more easily be compared with each other. Moreover, this way conclusions in this research can be checked and further enriched. The overall reliability of this research could also benefit from a wider sample of different organizations in and outside of the financial industry.

However, this research can also be seen as enrichment on current with literature with an example from the financial industry. A point of improvement would be to combine the qualitative data that is gathered in this study with additional quantitative measures in order to strengthen the reliability and value of the results and implications. However, by doing a qualitative research a paper will do more justice to the complete perspective of the employee.

In this research, the level of impact that the standardization has on the job perception of an advisor depended on the level of custom-made services that the advisor was offered before and after the changes. This leads to the question what the difference is in impact of the standardization between different types of advisors, and subsequently different levels of autonomy. This can still be further researched to see whether the concept of autonomy can play a role as mediator in similar change projects.

In retrospect, this research has given both academics and practitioners a glance of the culture and working habits within the financial industry. On both sides improvements and learning abilities still lie ahead, because change is always an inevitable promise for the future:

“For good and evil, man is a free creative spirit. This produces the very queer world we live in,

a world in continuous creation and therefore continuous change and insecurity.” J. Carry.

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