Jp Morgan Chase And Washington Mutual Commerce Essay

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            Organizational Culture is defined as "the system of shared actions, values and beliefs that develops within an organization and guides the behavior of its members" (Schermerhorn, Hunt & Osborn 2008, p. 364).  Taking this into account, we decided to look at JP Morgan Chase and Washington Mutual Bank and examine what kind of organizational culture exists in each company and determine the differences.  With the demise of Washington Mutual in 2008, the analysis is a bit after the fact, however, looking at their organizational culture and comparing it to that of JP Morgan Chase we can perhaps learn from Washington Mutual's downfall.

We have to ask, was there a breakdown in Washington Mutual's organizational culture that caused the behavior of its members to change and lead the bank down the road to eventual acquisition by JP Morgan Chase?  What makes JP Morgan Chase so strong? Does JP Morgan Chase have a successful organizational culture that carries them through even in the tough times?  How does the organizational culture of JP Morgan Chase compare to Washington Mutual's culture? These are some of the questions we will look at further on.

Mergers are nothing new to the world of business; countless of businesses have been acquired, bought out, phased out and bankrupted, along with other types of entity demises. How is it that a company can last over 200 years and continue to be one of the largest banks in the world while another dies in just over 100 years?

In order to understand the organizational culture of both banks we need to look at their background. Where did they come from and where are they now.

Historical Background of JP Morgan Chase

In 1799, the United States third Vice President Aaron Burr created the Bank of the Manhattan Company. Under the guise of "supplying the City of New York with pure and wholesome water" (Anonymous, 2005) during the Yellow Fever Epidemic of 1798, Aaron Burr helped to push a clause after being awarded $2,000,000 for the ambitious project underway. This was a clever ploy to sell the waterworks to the city and immediately turned itself to banking. This action opened banking privileges that helped prevent the monopolization in the banking industry that existed in the banking and state of New York.

"After an epidemic of yellow fever in 1798, in which coffins had been sold by itinerant vendors on street corners, Aaron Burr established the Manhattan Company, with the ostensible aim of bringing clean water to the city from the Bronx River but in fact designed as a front for the creation of New York's second bank, rivaling Alexander Hamilton's Bank of New York." (The Economist, 2000)

The fierce political and personal rivalry that existed between Vice President Aaron Burr and Secretary of the Treasury, Alexander Hamilton, led to the famous historical Burr-Hamilton duel that led to Hamilton's death in 1804.

Chase National Bank was founded in 1877 by banker John Thompson, whose son went on to start the "1st National Bank of the City of New York" which is better known today as Citibank. Chase National Bank kept its name until 1955 when Chase became interested in the Bank of the Manhattan Company. A merger proved to be not so easy since Aaron Burr's clause was still in effect, stale but still in play. Banker John J. McCloy, who was one the "Wise Men" (Isaacson & Thomas, 1986) under President Harry Truman's administration, acquired unanimous consent of shareholders for the bank to be taken over. When the deal was struck for Chase National Bank to take over the Bank of the Manhattan Company, McCloy became chairman to merge both businesses together forming Chase Manhattan Bank. George Champion succeeded McCloy and working with David Rockefeller, the bank became known as Chase Manhattan Corporation.

Chemical Bank of New York was founded in 1823 by three gentlemen; Balthazar P. Melick, Mark Spenser, and Geradus Post. Following the same tactic that Aaron Burr used in 1798, they started the New York Chemical Manufacturing Company to produce a variety of chemicals the same way Burr used water. They then successfully petitioned the New York State Assembly to become a bank; hence Chemical Bank of New York was born. ("Chemical Bank Company History: Chemical Banking Corporation"). In the early to mid 1990s, Chemical Bank purchased both the Manufacturers Hanover and Chase Manhattan and became Chase Manhattan Bank.

In the year 2000 the juggernaut J.P. Morgan & Company came into the picture. By now, Chase Manhattan Bank had become one of the most successful banks in the United States, but they were still looking to expand. An agreement was made and J.P. Morgan merged with Chase Manhattan Bank creating JPMorgan Chase & Company. This was a $650 billion merger, only second to Citigroup's $800 billion. (McGeehan & Sorkin, 2000). However, it didn't stop there; Bank One and Bear Stearns & Company came under the cross hairs of in the mid 2000s.

Historical Background of Washington Mutual

Washington Mutual was established in 1889 as the Washington National Building Loan & Investment Association after the great Seattle fire that consumed the majority of the business district.

The beginnings were modest, to be sure, but not long after its creation, Washington National made banking history. The association's first loans were approved in February 1890, one of which was an amortized home loan, perhaps the first of its kind in the United States. Washington National went on to approve more than 2,000 amortized home loans during the ensuing 20 years, becoming a much-used source for home mortgage loans. (Funding Universe)

Just shy of the First World War almost coming to an end, Washington National Building Loan & Investment Association changed their name to Washington Mutual Savings Bank and began to reap the rewards. "The recast institution boasted more than 16,000 depositors at the time of the United States' entrance into World War I and benefitted substantially from the century's first epic military struggle. During World War I, Washington Mutual's assets rose 68 percent, recording a gain of more than $4 million, and real estate loans registered an even greater increase, by 250 percent." (Funding Universe)

In 1930, Washington Mutual attained a suffering Continental Mutual Savings during the beginning of the Great Depression. By the end of the 1930s to the early 1940s, Washington Mutual grew to almost 100,000 depositors, once again benefiting from another economic boom.

The Second World War brought much attention to Washington Mutual Savings; selling almost $30 million in bonds. Now, no stranger to mergers, Washington Mutual Savings merged with Coolidge Mutual Savings Bank (increasing deposits to $72 million). New laws and legislations passed in the United States allowing Washington Mutual to build new locations and to grow quite rapidly. Still, Washington Mutual Savings remained, as the saying goes "under the radar" until the 1960s when it started to grow and expand out of the Seattle area. Washington Mutual Savings began to raise eyebrows in 1964 when they acquired Citizens Mutual Savings Bank which, was founded in 1902 as Citizens Savings & Loans Society. Washington Mutual Savings did not stop there, before taking over Citizens Savings; Washington Mutual Savings obtained Pullman Savings & Loan giving the Washington Mutual Savings a presence known throughout Washington State. The rapid growth of Washington Mutual came under scrutiny. Was Washington Mutual expanding too fast and spreading themselves too thin?

By the 1980s, Washington Mutual Financial Group, a seasoned corporation was almost 100 years old. Washington Mutual continued with their acquisition and merger spree and after successfully buying Murphey Favre, Inc. and Composite Research & Management Company, they remained silent for almost a decade operating in different areas of business such as travel services, real estate partnership, and commercial loans.

In 1983, Washington Mutual demutualizes converting to a capital stock savings bank and within six years, doubled its assets. Then, in the 1990s, a former Murphey Favre employee named Kerry K. Killinger, who had assimilated into the Washington Mutual environment, rose up through the ranks of Washington Mutual making CEO in 12 years. This is when questionable business practices began to take effect. The following is a list of the banks that were acquired under his reign:

Commercial Capital Bancorp, California, 2006

Providian Financial Corporation, California, 2005

Alta Residential Mortgage Trust, California, 2000

Long Beach Financial Corp., California, 1999

Industrial Bank, California, 1998

H. F. Ahmanson & Co. (Home Savings of America), California, 1998

Great Western Bank, 1997

United Western Financial Group, Inc., Utah, 1997

Keystone Holdings, Inc. (American Savings Bank), California, 1996

Utah Federal Savings Bank, 1996

Western Bank, Oregon, 1996

Enterprise Bank, Washington, 1995

Olympus Bank FSB, Utah, 1995

Summit Savings Bank, Washington, 1994

Far West Federal Savings Bank, Oregon, 1994

Pioneer Savings Bank, Washington, 1993

Great Northwest Bank, Washington, 1992

Sound Savings & Loan Association, Washington, 1991

CrossLand Savings FSB, Utah, 1991

Vancouver Federal Savings Bank, Washington, 1991

Williamsburg Federal Savings Association, Utah, 1990

Frontier Federal Savings Association, Washington, 1990

These acquisitions over the years gave Washington Mutual an unprecedented growth. Just over the bank turning 100 years old, it was worth $42 billion.

Killinger's philosophy was quoted by the New York Times, "We hope to do to this industry what Wal-Mart did to theirs, Starbucks did to theirs, Costco did to theirs and Lowe's-Home Depot did to their industry. And I think if we've done our job, five years from now you're not going to call us a bank." (Goodman & Morgenson, 2008)

The Subprime Mortgage Crisis had a terrible effect in the finance industry, and Washington Mutual felt the brunt of its force. This sent everyone running for cover. Eventually, the crisis led to the board of directors to removing Killinger as CEO in late 2008. The FDIC was dubbed as the receiver of the largest bank failure in the history of United States. Before Washington Mutual was sold to JP Morgan Chase, "Kerry K. Killinger earned a total compensation of $14,364,883, which included a base salary of $1,000,000, a cash bonus of $0, stocks granted of $10,120,731, and options granted of $2,846,400.) (Equilar, 2007)

Problem Statement

As stated previously, Organizational Culture is defined as "the system of shared actions, values and beliefs that develops within an organization and guides the behavior of its members" (Schermerhorn, Hunt & Osborn 2008, p. 364) Looking at Washington Mutual we see that a once strong and reliable organization has shifted it's structure and organizational culture to a more toxic format. The board of directors having buried their heads in the sand, allowed their CEO Kerry Killinger to change the way Washington Mutual conducted business. When Killinger came on board he followed the shared actions, values and beliefs that Washington Mutual had established over the years. This was made possible by the check and balance system of the executive team. As time went on Killinger shifted the organizational structure without any opposition from the governing board and eliminated the executive team which had provided the check and balance system. Killinger split the bank into two divisions, consumer banking and mortgage banking. Along with the shift in structure a new organizational culture formed and a greed mentality began to take over. In the mortgage division, the value of making money at any cost prevailed. In the local bank a more laid back casual atmosphere was developed hoping to excite customers into the "friendly bank" in hopes of gaining more mortgages. Washington Mutual had no defined businesses principles, codes of conduct, ethics or board of governance. We shall explore these issues further on.

Literature Review

Organizational Culture - What is it?

"People in every workplace talk about organization culture, the mysterious word that characterizes a work environment; one of the key questions when employers hire an employee explores whether the candidate is a good "cultural fit (Heathfield, n.d. Organizational Culture ¶ 2)".

So what is culture? A basic definition of organizational culture "is the collective way we do things around here. It involves a learned set of behaviors that is common knowledge to all the participants. (Corporate Culture Defined n.d. ¶ 1)".

"Organizational culture is the workplace environment formulated from the interaction of the employees in the workplace (Heathfield, n.d. Organizational Culture ¶ 1)".

"Culture is the environment that surrounds you at work all of the time. Culture is a powerful element that shapes your work enjoyment; you work relationships, and your work processes. But, culture is something that you cannot actually see, except through its physical manifestations in your work place.

In many ways, culture is like personality. In a person, the personality is made up of the values, beliefs, underlying assumptions, interest, experiences, upbringing, and habits that create a person's behavior (Heathfield, n.d. Your Environment ¶ 1-2)".

Schermerhorn, Hunt & Osborn define organizational culture as "the system of shared actions, values and beliefs that develops within an organization and guides the behavior of its members" (Schermerhorn, Hunt & Osborn 2008, p. 364). 

In their article "Uncovering Organizational Culture: A Necessary Skill for Athletic Trainers (Hudson & Irwin, 2010), organizational culture is also defined as the combination of knowledge, beliefs, values, behaviors, and practices that influence the manner in which members of a group think and act (Defining Organizational Culture (¶ 4)".

Finally, Hudson & Irwin cited Schein (2004) defining organizational culture as:

"a pattern of shared basic assumptions that was leaned by a group as it solved its problems of external adaptation and internal integration that has worked well enough to be considered valid and, therefore, to be taught to new members as the correct way to perceive, think and feel in relation to those problems (Hudson & Irwin, 2010 ¶ 5)".

How is culture created and what types are there?

Since organizational culture, sometimes referred to as corporate culture is the shared assumptions, values beliefs etcetera, it is common belief that foundation of organizational culture start with upper management, specifically the Board of Directors and the CEO. While organizational culture also embodies sub-culture, we are only looking at culture in the broad corporate sense. Any change or development of organizational culture cannot occur "without the buy-in and commitment of the CEO (Ferro, 2010 ¶ 3)".

Leadership needs to establish "respect for the mission (Goltz, 2009 ¶ 3)".

Leadership also needs to "train their employees rigorously and empower them to solve problems (Goltz, 2009 ¶ 4)". Goltz also stated that "building a strong culture requires hiring the right people, firing the wrong people and managing the work environment. (¶ 9)"

"One of the surest ways to align the culture to the organization's strategy is to apply leadership practices that are also aligned. The leaders, at all levels, need to know what the required culture is and then determine ways of establishing practices and procedures in all operations that will closely reflect the desired culture. They also need to role model the very behaviors they wish exhibited by everyone in the organization and provide the necessary support to others that will enable them to function accordingly as well. Particular attention also needs to be given to all communications (Corporate Culture Defined, n.d. ¶ 7)".

Organizational culture "can be created or reinforced through the use of socialization. Avenues for socialization abound in functions like selection, placement on the job, job mastery, the measurement and rewarding of performance, and recognition and promotion. Reinforcing a culture can emerge through the stories told and the folklore propagated and, most importantly, through the adherence to chosen important values (Corporate Culture Defined, n.d. ¶ 6)".

McNamara, in his book "Field Guide to Leadership and Supervision (2000)", defined culture as "the personality of the organization (McNamara, as cited in Organizational Culture, n.d. ¶ 1)". McNamara went on to state "Corporate culture can be looked at as a system (McNamara, as cited in Organizational Culture, n.d. ¶ 2)" which can be broken down into several categories as defined by Jeffrey Sonnenfield (as cited in Organizational Culture, n.d. ¶ 5-9) which are listed below.

"Academy Culture

Employees are highly skilled and tend to stay in the organization, while working their way up the ranks. The organization provides a stable environment in which employees can development and exercise their skills. Examples are universities, hospitals, large corporations, etc.

Baseball Team Culture

Employees are "free agents" who have highly prized skills. They are in high demand and can rather easily get jobs elsewhere. This type of culture exists in fast-paced, high-risk organizations, such as investment banking, advertising, etc.

Club Culture

The most important requirement for employees in this culture is to fit into the group. Usually employees start at the bottom and stay with the organization. The organization promotes from within and highly values seniority. Examples are the military, some law firms, etc.

Fortress Culture

Employees don't know if they'll be laid off or not. These organizations often undergo massive reorganization. There are many opportunities for those with timely, specialized skills. Examples are savings and loans, large car companies, etc."

There are also functions of organizational culture. External adaptation and Internal integration. As Schermerhorn, Hunt & Osborn (2008) state, "External adaptation deals with reaching goals, the tasks to be accomplished, the methods to be used to achieve those goals, and the methods of coping with success and failure. Internal integration, deals with the creation of a collective identity and with ways of working and living together (p. 365)".

Organizational Culture change and failure.

Can there be successful organizational culture change? Can organizational culture fail?

In order for organizational culture to change it must be a "shared responsibility, and to be successful, every member of the team must play a role. No matter where one sits in the organization, everyone has an impact on its fabric (Ferro, 2010 ¶ 7)". In an effort to improve their organization and change its culture, Ferro stated that "they should have taken a more aggressive approach to terminate those individuals who impeded their ability to change and no longer fit into the company culture. They should have worked more aggressively with the constant complainers and those with a sense of entitlement, coaching them on their behavior. Negativity can impede productivity because so much time is spent coddling these individuals and does not allow the recognition of the impact these workers have on others (Ferro, 2010 ¶ 8)".

Sometimes it is necessary to start from scratch and start all over. "If you want to change the culture, you have to change the people (Wines & Hamilton III, 2009 p. 434 ¶ 2)".

"In cultural changing, organizational employees generally fall into three groups: (a) those who have signed on for the task; (b) the resistance forces; and (c) those that fall on the fence who hesitate while they wait to see which side will prevail (Wines & Hamilton III, 2009 p. 434 ¶ 2)".

Any "genuine change in organizational culture probably needs at least two parts: (a) organizational changes such as a strong, well-funded ethics office endorsed and actively supported by the very top management levels with resources, power, and status; and (b) new vocabularies empowered by new stories conveying new values Wines & Hamilton III, 2009 p. 434 ¶ 4)".

Work experiences can "turn sour because of corporate culture and internal politics (Knox & Butzel, n.d. ¶ 1)".

In fact, "most culture change fails not because clinicians and managers don't want to change, but because many times, leaders make the mistake of decreeing new processes rather than listening to those in the rank and file who have their own ideas about making things better (Betbeze, 2009 p.19 ¶ 1)".

As we can see, culture is inherent in any organization. From processes, stories, myths, rites, values and assumptions, all has an effect on the productivity of an organization. If upper management allows a toxic culture to form the ultimate price is sometimes the demise of the organization as seen with Washington Mutual.

Analysis

Although both of these corporations were incredibly successful over their long history, their organizational cultures were entirely different. Generally speaking, East Coast based JP Morgan Chase hereby referred to as Chase, has a more disciplined, straight-laced and professional manner when conducting business. Chase is one of the oldest financial services firms in the world with its traditional old school style of business that has been intact since its inception over 200 years ago. Chase has a defined set of business principles which are split into three categories:

Aspire to be the best;

Develop a world-class franchise in business we operate

Be field- and client-driven, consistently delivering the best products and services in a cost-effective way

Innovate, test and learn

Create powerful brands that carry a commitment of quality and integrity

Execute Superbly;

Demand and maintain strong financial discipline, building for good times and bad

Create and maintain a fortress balance sheet

Design and maintain the best systems and operations

Eliminate waste and bureaucracy

Maintain a strong system of internal governance and controls

Measure performance through a complete and balanced scorecard

Build a great team and winning culture;

Operate with the highest standards of integrity

Train and retain great managers

Be open and honest with ourselves, our colleagues, our shareholders and our communities

Get incentives right

Foster an environment for respect and inclusiveness

Give back to our communities (JP MorganChase)

In addition to the defined business principles, Chase also has a defined "Corporate Governance Principles of the Board policy which outlines the responsibility of the Board of Directors. (JP Morgan Chase)

"The Board as a whole is responsible for the oversight of management on behalf of the Firm's stockholders. The principal functions of the Board are to oversee processes for evaluating the adequacy of internal controls, risk management, financial reporting and compliance with law and the Firm's code of conduct; to evaluate and determine the compensation of the Chief Executive Officer; to review the Firm's compensation and benefits programs and its succession planning and diversity programs; to review the major strategic, financial and other objectives of the Firm; to review the Firm's community-oriented activities; and to nominate directors and evaluate the structure and practices of the Board to provide for sound corporate governance. The Board accomplishes these functions acting directly and through its committees." (JP Morgan Chase)

Chase continues setting up their organizational structure and culture by having a defined Code of Conduct Policy.

"This policy is for all employees of Chase including the rank and file. Chase states "Our integrity and reputation depend on our ability to do the right thing, even when it's not the easy thing. The Code of Conduct is a collection of rules and policy statements intended to assist employees and directors in making decisions about their conduct in relation to the firm's business. The Code is based on our fundamental understanding that no one at JPMorgan Chase should ever sacrifice integrity -- or give the impression that they have -- even if they think it would help the firm's business.

The purpose of our Code of Ethics is to promote honest and ethical conduct and compliance with the law, particularly as related to the maintenance of the firm's financial books and records and the preparation of its financial statements. The obligations of this Code of Ethics supplement, but do not replace, the firm's Code of Conduct." (JP Morgan Chase)

All of the above stated polices and principles help foster Chase's organizational culture. Chase promotes a traditional viewpoint when doing business and a strong work ethic fostered by their beliefs, values, shared actions and behavior requirements governed through these principles. It trickles down from upper management to the rank and file workforce and has been the backbone to the success of the business.

Conversely, looking at Washington Mutual, herby referred to as WaMu and reviewing their history, we see that WaMu originally began with similar principles. Over WaMu's 119 year history, surviving the Depression and the S & L Crisis, their traditional business practices carried them through the tough storms. In addition to WaMu's traditional business practices they had a history of friendly service that can be documented back to its very humble beginnings. They were truly the first bank to grant a home loan in the United States back in 1890. This trait stayed with them until the FDIC taking over. Washington Mutual constantly praised how good change is and it should be embraced. (Washington Mutual Jobs) WaMu was known at the "Family Friendly Bank" until 1999. (Grind, 2009)

In 1988, WaMu's former "chief, chose the entrepreneurial optimistic Kerry Killinger to lead the bank, but surrounded Killinger with other prudent, seasoned executives." (Grind, 2009, ¶ 8) In the beginning of Killinger's career at WaMu, he adhered to a strict no-frills policy with each acquisition he made. Killinger's support team of top executives would keep the business of acquisitions rolling and the process enabled the acquisitions to be accomplished successfully. (Grind, 2009, ¶ 13-14) Then in 1999 "at the height of WaMu's growth, Killinger shifted WaMu's structure and culture and split the bank into two autonomous units of consumer and mortgage banking. Soon thereafter, the traditional business practices and family friendly services were thrown out and a "culture of unmitigated greed" took over. (Grind, 2009) In an effort to foster more business for their consumer banking division Killinger instituted a more relaxed, casual, and independent atmosphere. This proved evident when Washington Mutual started to open their "occasio" retail banking. ""Occasio," a Latin noun for "favorable opportunity," represents a dramatic shift from traditional bank branches in look, feel and service. Rather than directing customers out to the ATMs, Occasio takes its cues from cutting edge retailers, using an open, welcoming environment and top-notch customer service to draw people into the financial center. The complete package is unlike anything else the banking industry is offering." (Business Wire, 2001).

Washington Mutual's replacement of the drab, traditional appearance with the look and feel of a contemporary retail store was totally unheard of. Walking into an environment where customers are greeted by casually dressed concierge greets them and then escorts them to the proper service location. Tellers were literally nonexistent, customer consultation areas were setup for opening accounts or applying for loans, and there were special areas for customers to talk with a financial consultant to discuss various investment opportunities. This type of ambiance in business is literally absent in the East Coast. This only feeds more to the West Coast work ethic.

On the mortgage banking side, the executive in charge, Craig Davis took an aggressive approach to the mortgage business. "The management shift disrupted the system that had worked so well, had inadvertently eliminated the checks and balances that existed with Killinger's executive team." (Grind, 2009) The result was a development of faulty business practices. Brokers and assessors were paid to inflate prices. Employees were made to share in unethical actions and promoted unethical behavior. They were told this is how it is to be done and they tried to not get in the way of the executives. People who should have never qualified for loans were push through the system and their loans were sold to the highest bidder. The riskier the loan the more money the bank would make and the "Family Friendly" bank was now non-existent.

So how did Killinger, the CEO of WaMu get away with changing the organizational culture, which changed the beliefs, values and shared business practices that had been a part the WaMu of the past 119 years?

As the saying goes "A fish rots from the head down". (Goltz, 2009) Where was the Board of Directors? As the literature shows everyone in the organizations must participate in the organizational culture and any change. WaMu's CEO Killinger showed a bit of the "Baseball Team Culture" mentality where employees are "free agents" who have highly prized skills." (as cited in Organizational Culture, n.d. ¶ 5-9) Killinger operated as a free agent conducting business as he saw fit without much interference. As Lightle (2009) states, "The Board of Directors failed in their mission to protect the stockholders". (¶ 3) It is the board of director's responsibility to oversee the ethical values of the organization they serve. (Lightle, 2009, as cited in the Sarbanes-Oxley Act of 2002) WaMu's board of directors had "neglected to establish codes of conduct, ethical guidelines, monitoring programs and a corporate culture that might have prevented the fraudulent acts". (Lightle, 2009) The board is "the first line of defense as shareholder fiduciaries, to assume a proactive role in defining the desired organizational culture and approving strategies for achieving it. Once such strategies have been defined and approved by the board, it becomes management's responsibility to develop and implement specific policies and procedures to support those strategies. The responsibility of the board remains to monitor the effectiveness of those policies and procedures as part of its evaluation of management performance." (Lightle, 2009)

WaMu's values changed and money became the valued object. Considering the Organizational Culture Inventory Circumplex which can be viewed in the appendix; Killinger seems to exhibit some of the Avoidance Thinking Style which, "reflects apprehension, a strong need for self-protection and a propensity to withdraw from threatening situations. (Human Synergistics, n.d. Avoidance Style) Killinger refused to accept that anything was wrong with WaMu even when the signs were so strong. He just kept hoping it would go away even when members of his staff would bring it to his attention. In addition to the Avoidance Thinking Style both Killinger and Davis the head of the mortgage division showed signs of operating in the Power Thinking Style which "reflects needs for prestige and influence, and the tendency to equate self-worth with controlling others. People with strong tendencies toward this style dictate (rather than guide) others' actions, try to run everything themselves and treat others in aggressive and forceful ways. (Human Synergistics, n.d. Power Style) "Killinger who once stripped companies of executive perks, was now growing accustomed to them and as the faulty business practices continued and money poured in, Killinger began to embrace the trappings of a CEO" (Grind, 2009)

Solutions

After reviewing the culture of both JP Morgan Chase and Washington Mutual, we have to ask the question, what could Washington Mutual have done to help sustain them during the subprime mortgage crisis? Other than the obvious not entering the subprime mortgage business to begin with, we have come to the conclusion that the following might have been useful in preventing the change in the core organizational culture.

First, Washington Mutual like JP Morgan Chase should have an actively engaged board of directors. It is the board of director's responsibility to "establish codes of conduct, ethical guidelines, monitoring programs, and a corporate culture. (Lightle 2009) All guidelines should be published and presented to all new employees both rank and file and all management at the time of hire.

Second, Washington Mutual should establish the appropriate "tone at the top" and ensure the adequacy of policies and procedures for compliance with legal and ethical standards." (Lightle, 2009) As the literature suggests the enforcement of the policies and implementation of organizational culture falls to the CEO who makes sure subordinate managers carry out and share the values and beliefs of the company.

Leadership also needs to "train their employees rigorously and empower them to solve problems (Goltz, 2009 ¶ 4)". The ability to solve problems was taken away from the employee when Washington Mutual started engaging in faulty business practices.

Goltz also stated that "building a strong culture requires hiring the right people, firing the wrong people and managing the work environment. (¶ 9)"

"One of the surest ways to align the culture to the organization's strategy is to apply leadership practices that are also aligned. The leaders, at all levels, need to know what the required culture is and then determine ways of establishing practices and procedures in all operations that will closely reflect the desired culture. They also need to role model the very behaviors they wish exhibited by everyone in the organization and provide the necessary support to others that will enable them to function accordingly as well. Particular attention also needs to be given to all communications (Corporate Culture Defined, n.d. ¶ 7)".

Organizational culture "can be created or reinforced through the use of socialization. Avenues for socialization abound in functions like selection, placement on the job, job mastery, the measurement and rewarding of performance, and recognition and promotion. Reinforcing a culture can emerge through the stories told and the folklore propagated and, most importantly, through the adherence to chosen important values (Corporate Culture Defined, n.d. ¶ 6)".

A big part of making sure employees have the right attitude to fit in with WaMu's organizational culture is the type of personality each employee has. According to Schermerhorn, Hunt and Osborn (2008) "There are two popular ways of categorizing personality traits, the Myers Briggs Type Indicator [MBTI] and the Big Five Model" (p. 41,42).

Reflection and Conclusion

This has been an interesting journey looking into two well know organizations….

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Appendix

Organizational Culture Inventory Circumplex

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