June 9, 2014
Instructor: Yvette Mack
Emerging of Bank of America
Bank of America is one of the largest financial institutions around the world. The institution actually began and existed solely to service those that were turned away from other banks; mostly farmers who had come from Italy. Its humble beginnings, a small bank called Bank of Italy that was established by Amadeo Peter Giannini and his son in San Francisco, California in 1904 (Bank of America Heritage., 2012). Today, Bank of America provides services for over 57 million consumers its new headquarters is now in Charlotte, North Carolina.
Considering the different types of organizational structures; vertical structures and horizontal structures, with the vertical structure consist of a hierarchically structured organization where all management activities are controlled by a centralized management staff (Bateman, Snell, 2011). Bank of America encompasses a more traditional type of organization such that it has develops strong bureaucratic control over the organizational activities. A horizontal structure is one of decentralized power and control. Leadership is often shared among team leaders and members shifting to the person with the most knowledge or expertise in the matter. Within the horizontal structure there are also other types of sub-organizational structures; The Functional Organization (Departmentalization around specialized activities), The Divisional Organization (units around products, customers, or geographic regions), The Matrix Organization (managers report to two superiors) and The Network Organization (independent mostly single-function firms that collaborate on a good or service), (Bateman, T. S., & Snell, S. A., 2011). Bank of America is a company that needs to continually determine whether they implement the appropriate structure by reviewing the organizations accomplishments and how well they are expected to meet their goals.
Bank of America Structure The initial structure for Bank of America (The Bank of Italy) in 1904 was comprised of its CEO (Amadeo Peter Giannini) and a small board of directors. The top managerial level also included a board of directors without any additional management. When the bank expanded and merged with other financial corporations, the merging of Bank of America with other corporations i.e. Nations Bank, Fleet Boston and Merrill Lynch among others had different organizational structures created the need for the new bank to restructure its own organization (Bank of America Heritage 2012).
The current structure is comprised of a CEO, CFO, COO, a board of directors and an international operations team amongst others that report directly to the CEO. Although the CEO is the leading executive; the functional organization uses a divisional structure because of its departmentalization of groups around products and geographic regions. This kind of organizational structure has several advantages. One major advantage is that this particular structure has been adapted by Bank of America which has now incorporated other multinational companies. This type of organization can be best described as a matrix organizational structure (Joseph, 2012).
The Matrix structure is a combination of both functional and divisional structure. This structure is probably the most effective because it incorporates both of the above. The advantage is a higher degree of flexibility and adaptability. The matrix structure can speed decisions and cut costs. Many of the disadvantages stem from the matrix's inherent violation of the unity-of-command principle, which states that a person should have only one boss (Bateman, Snell, 2011). A con to the matrix structure is that reporting to two bosses can create confusion and a difficult interpersonal situation, unless steps are taken to prevent these problems from arising. A