Case Analysis On Citigroup 3k1s

CASE ANALYSIS ON CITIGROUP RESTORING ETHICS AND IMAGE BEFORE GROWTH ASHWIN RAM R GOWTHAM S GOMATHI S NIC PAUL VARGHESE PORKO G

Has a Legacy of 200 years  Citigroup is the first financial services company in the U.S. to bring together banking, insurance, and investments under one umbrella in 1998  Has 141,000 full-time, 7,000 part-time employees in the U.S. 146,000 full-time employees in more than 100 countries outside U.S. 

CITI GROUP

SANDY WEILL

EVERYTHING ABOUT WEILL IS BIG, INCLUDING HIS AMBITION

Was the CEO of CITIGROUP from 1998 to 2003  Founder of the Insurance company THE TRAVELER’S GROUP  Merged Traveler’s Group, Salomon Smith Barney, and Citicorp banking empire for 83 billion dollars  His name is associated with many corporate 

CHARLES PRINCE An absolute loyalist to Weill  Became the CEO of Citigroup in 2003 

Appointed as the CEO to be fireman, cleaning up scandals and improprieties since the late 1990s  Introduced the Five Point Ethics Plan in 2005 

SCANDALS 

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SPITZER INVESTIGATION – Salomon Smith Barney paid a$400M fine WINSTER – Jack Grubman, SSB paid $5m to settle charges FEDERAL TRADE COMMISSION INVESTIGATION Tricking borrower into high cost credit insurance, $215m consumer protection settlement ENRON FRAUD – helped ENRON to siphon out $500m

SCANDALS 

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WORLDCOM SCANDAL – led to the collapse of the company in 2004, paid $2.65b to WORLDCOM FINANCIAL SERVICES AGENCIES INVESTIGATION – led to the termination of CITIGROUP operations in Japan in 2004 By 2002, lost 30% of its market value In 2005, Federal reserve blocks M&E activities

PRINCE’S PLAN 

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Hired Sally Krawcheck as the CFO to clean up CITIGROUP’s image Introduced the ‘ THE FIVE POINT ETHICS PLAN’

THE FIVE POINT ETHICS STUDY EXPANDED TRAINING  ENHANCED FOUCS ON TALENT AND DEVELOPMENT  BALANCED PERFORMANCE APPRAISALS  IMPROVED COMMUNICATIONS 

DISCUSSIONS 1) Has citigroup grown too large to enforce corporate governance or internal controls?

DISCUSSIONS 

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Yes , The Citigroup has grown large Strategy ->Five point ethics plan

DISCUSSIONS What effect has the organization’s size and complexity had on the continued problems?

DISCUSSIONS Individual heads may be more powerful than the superior heads.  A new set of rules will bring a change in their work culture and working style.  People are resistant to changes in a work environment 

DISCUSSIONS 2) What effect will the new plans have on Citigroup’s investors?

DISCUSSIONS In short term,there wont be any change  In long term,the organisation can expect new investors to come in 

DISCUSSIONS What can Citigroup do to mitigate negative responses?

DISCUSSIONS Should keep the stakeholders informed about the implementation of the plans.  Should convince the stakeholders by projecting the advantages of the plans.  Should project on the remedies to be followed incase of any uncertainities in 

DISCUSSIONS 3.How can Citigroup continuously communicate the reformed organizational culture to the public?

DISCUSSIONS  

Press Conferences Ad through different channels 1. 2. 3. 4.

TV talk spots and commercials. Internet ads Bill board ads Radio

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Community Events 1. 2. 3. 4.

Local Events Carnival Weekends Retreats Charity Events

DISCUSSIONS 4. How would you react if you were the corporate communications officer of a Citigroup competitor?

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Already Citigroup has lost 30% of its market value and people think it as ethically bankrupt. Competitors’ communication officer should project the advantages of their company’s plan and policies and must convey that

DISCUSSIONS 5) Do you believe it is possible to enforce an ethics program with this or any other organisation?

DISCUSSIONS It is difficult to enforce ethics into an organisation.  Communication barriers.  Focus on the long term rather than short term.  Although difficult, its not impossible.  New recruitments into the organisation  Drawback- financial strain.  Better pay can lure recruits over the ideals of 

DISCUSSIONS 6) As a corporate communications officer, what would be your method to communicate the plan to Citigroup employees and inspire change?

DISCUSSIONS 

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Guidance, training, incentive, reward, promotion, , recognition, empowerment and good office atmosphere. Sense of security. Anonymous general - hotline Shared responsibility. Message reinforced constantly. HR managers to be on a lookout.

DISCUSSIONS 7) Is Prince’s plan sufficient given the magnitude of the problems facing Citigroup?

DISCUSSIONS No it’s not sufficient 

Prince Resignation in 2007

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Appointment of new bloods may help the better implementation of the ethical programs, as the

older employees are more resistant to any

DISCUSSIONS 8) Who are the critical stakeholders? How should Prince handle the stakeholders’ responses and concerns?

DISCUSSIONS 

Customers

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Employees

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Managers

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Shareholders

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Government

DISCUSSIONS Government said no to mergers - To avoid future scams and also to settle past scams  Prince handles by describing about 5 point ethical plan to the share holders regularly and giving them confidence 

THANK YOU!