Topic: Bank of America and MBNA, a Case Study In Avoiding Culture Clash

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Bank of America and MBNA, a Case Study In Avoiding Culture Clash
In 2006 Bank of America acquired credit card giant MBNA for $35 billion. This made it
the biggest credit card corporation in the United States. As in several other cases where such
mergers lead to clashes in culture and, eventually failure, this was awaited with anxiety.
However, to the surprise of many, this merger has continued to flourish. The acquisition of
MBNA by Bank of America originally looked like a formidable case of unrelated cultures being
crushed together. One was tightly wound in the cult-of-the-customer camp, suit-and-tie while the
other was a casual business sort of a company.
MBNA was the sort of company that seemed to look at the welfare of its employees at
whatever cost with things such as high salaries, private golf course, and private jets. In a
different view, its corporate philosophy was followed with a passion that can only be related to a
cult than a corporation. On the other hand, Bank of America was more dedicated on the job at
hand, just conducting business and not spending money on superfluities for its employees (Dash,
2007). In the business domain, a company that spent excessively on its workforce and one that
was very economical could merge culturally.
However, Bank of America made it work. There is one main possible reason why the
acquisition appeared to succeed rather than to collapse as so many anticipated. When Bank of
America acquired MBNA, its brass recognized that, while moving in, they would have to adapt a
particular tactic to making things work; that was open mindedness. They knew of the MBNA
corporate culture, and that it was such a blunt contrast from their own (Dash, 2007).
However, they also understood they could not simply move in, changing every sector of
the company. Therefore, they heeded in a sense and tried to maintain some continuousness for
the newly assimilated MBNA associates. It decided to keep several important MBNA approaches. Bank of America decided to follow the MBNA ways it had long admired — from its
aggressive debt collection techniques to its partnership marketing expertise and belief in high
fees. The Bank also retained MBNA’s massive technology system. It reserved all twelve of
MBNA’s key call centers while it did away with a few of its own. Correspondingly, it also kept
back a number of top executives from MBNA (Fierce Finance, 2007).
However, smaller details were equally debated as the changeover team sought to find the
middle ground. For example, take a look at the corporate dress code. Every day, MBNA workers
went to work in a jacket and tie to keep up with the company’s button-down culture. On the other
hand, Bank of America employees strictly adhered to a business casual sort of attire (Prins,
2009). Transition team leaders gauged the employees to isolate the way the associates would
react and fit in.
They analyzed the possible effect of any alteration in the dress code on the corporate
culture. Eventually, the team got to a middle ground. As a result, business suits and ties are still
worn in front of clients and in the corporate offices of the credit-card division. However, back-
office operations mainly wear business casual. It can therefore be said that Bank of America gave
in to some MBNA customs. However, shortly after the acquisition, MBNA workers were issued
with pins, which had the Bank of America’s logo (Prins, 2009).
They also had to do away with the “green and gold spirit points.” Consequently, Bank of
America offered similar incentives, and they were also introduced in the Charlotte bank’s core
principles. Bank of America’s officials have hung MBNA’s gold signature “Think of yourself as
a customer” writings up on their own offices’ walls. The Bank of America eventually adapted a
hybrid code. In several cases, Bank of America chose to retain the cultural practices that existed
in MBNA (Fierce Finance, 2007).

In other cases, however, Bank of America imposed its control on MBNA. For instance,
because the pay rates at MBNA were well over the market value, many of its managers were
obliged to take a steep cut in pay. Some MBNA former employees have since left, but most have
stayed on. In many instances, the cultures co-adapted (Dash, 2007).
However, not everything has, of course, gone smoothly. Bank of America managers
complained that some of their MBNA associates can come across as autocratic and arrogant. By
contrast, MBNA managers complain that the bureaucracy at the Bank of America’s has slowed
down the company. Nonetheless, deeper down, understated differences still exist. At meetings in
Bank of America, junior employees are summoned to take part in discussions. However, at
MBNA meetings, it was rare for anyone to even challenge the boss’s views (Dash, 2007).
Bank of America managed to blend in with the dress code and other resolutions without
toppling the ship. This is a rare example, which most mergers would envy. However, the secret
here was simply in understanding the similarities and differences between the two corporates.
The next step was the decision on what to keep from either side and what not to keep. And this
approach came out to be successful for Bank of America.

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