Posted at 11.27.2018
Nomura Securities was founded in 1925 by Tokushichi Nomura II and it was the first Japanese securities company to establish an office outside Japan in 1927. Nomura Securities Co. Ltd is a subsidiary of Nomura Holdings. Inc, a Japanese financial keeping company. Nomura Securities is the leading Brokerage house and Investment bank in Japan and performs collateral and fixed-income trading, underwriting of stock and bond issues, M&A advisory services. Until Oct 2008, most of Nomura's functions were mainly limited within Japan and having made a number of unsuccessful efforts to develop into other key market segments, the acquisition of Lehman became a watershed package. In order to expand its operations globally Nomura took over the Asian, European and Middle Eastern (EMEA) operations of Lehman brothers, an American investment loan company after it filed for Section 11 personal bankruptcy. Barclays got over Lehman brothers UNITED STATES Functions. The acquisition of Lehman Brothers is expected to help Nomura reach its goal of becoming one of the top five impartial successful global investment lenders.
Before the acquisition of the Lehman businesses Nomura acquired an 18, 000 strong labor force although a sizable part were centered out of Japan, and greater than 90 % of its revenue from its local operations. After the acquisition, it retained over 8, 000 former Lehman staff which supposed Nomura had a difficult task at hand to incorporate two very different corporate ethnicities. The union was termed as 'matrimony of Tokyo and Wall streets. '(FT. com, 2008) This is the very first time when such a union had been attempted in the investment banking arena. The company continues to be in its cultural transitional phase and it's really trying its best to get over its teething problems.
1. 2 Operations
Nomura's functions are divided into three locations:-
Asia-Pacific including Japan and India- Regional headquarter is Hong Kong. Its functions are distributed across 12 countries in the region.
Americas- Regional headquarter is at New York. It runs from 6 situated near commercial establishments office buildings in North and SOUTH USA.
Europe, Midsection East and Africa (EMEA) - Local headquarter is London. The procedures are distributed across 18 countries in your community.
The bank's global head office is Tokyo, Japan. Most of Nomura's business lines are coordinated globally and the regional heads report to their Tokyo-based business heads.
Source: http://www. nomuraholdings. com/investor/summary/financial/data/2009_2q_leh. pdf
http://www. nomuraholdings. com/investor/library/ar/2009/pdf/ar_all. pdf
1. 2 Vision
Its long-term vision is to be the top indie global investment bank or investment company.
Source: http://www. nomura. com/europe/about_nomura/index. shtml
Expansion of businesses could provide a firm's organisational composition to become more technical as decision making takes more time. To make the decision making process faster and effective Nomura made a decision to reaffirm its matrix management design of organisation. Nomura's approach to decision making is quite centralised. Centralization means that the responsibility of making decisions is limited to those at the top of the organisation's hierarchy. (Gordon, Pg 403)Decision making at Nomura is top down which contains the Chief Professional Officer (CEO) on the top followed by the principle Operating Officer (COO) and then five CEO's for every of its business department. The CEOs of business divisions are accountable for all the decision making of the division taking into consideration the management ideals implemented by the Nomura group all together. All these heads are based in Japan. To oversee the business's European operations gleam European Regional Mind.
Matrix structure is an integration of an operating and market Oriented structure. Practical structure groups' people matching to their skill set. It allows section of labour as specialisation which makes the organisation more effective. Alternatively in a Market Oriented composition employees are grouped corresponding to product, project, client or physical area. A Matrix structure team has two minds i. e. one being the functional mind and other a regional head. Matrix framework helps in versatility of employees according to the changing needs of the company. It also aids in quick decision making and results in diversity in skills and ideas.
At Nomura, employees are grouped corresponding to their knowledge in various efficient lines as well as relative experience in consumer servicing. The Lehman acquisition although brought in strong operational diversity and better branding the resultant organisational framework was mammoth and complex - an HR headache possibly.
Nomura's post-Lehman functional structure looks more varied both from something offering and a geographical stand-point; Nomura has three reportable geographic sections with a stronger expertise pool and a broader franchise i. e. Asia-Pacific, Americas and European countries, Midsection East and Africa (EMEA). It has appointed CEOs every business division stationed in Tokyo with every region developing a regional head as well as a regional 'divisional' brain.
Organisation Culture is described 'as a set of shared values and values that connect to an organization's people, framework, and systems to create behavioural norms. ' (Harvey Brown, Pg 69) Every company has a unique culture. Nomura traditionally has been a conservative buyer and basically risk-averse which looked like poles in addition to the usual wall-street beliefs. The distinctions between Nomura's Japanese and American Corporate ethnicities are cited below:
Employment Tenure- Employees in Japan are more likely 'wedded' with their businesses with most companies expecting to hold on to skill through long-term work schemes. American companies, on the other hands have their eye firmly established on success and come back.
Promotions- In Japan marketing promotions derive from years and seniority whereas in the us promotions are based more on performance.
Payroll- Japanese Companies usually pay their employees a fixed salary with low or hardly any bonus offer whereas American firms have fixed earnings and employee bonus products are decided corresponding to their performance.
Decision Making- In Japanese companies decision making is top down whereas in American style companies professionals have more delegation and authority. Therefore decision making in American firms is prompt.
Attitude towards risk- Japanese are risk averse whereas People in the usa are more ambitious.
Work Culture- Japanese work culture is very stiff in terms of dress code and punctuality to work whereas American culture is more flexible.
Nomura appointed 8, 000 past Lehman employees. To keep the Lehman procedures running Nomura possessed an uphill job of keeping Lehman's employees which meant it had a need to change its company culture.
Source: http://globalization. suite101. com/article. cfm/japanese_corporate_culture
Strengths- Lehman experienced a solid position in Europe and it possessed well developed IT and R&D platforms. It possessed high velocity trade machines. Lehman was very effective and was one of the better in the market segments aided by an extremely skilled work force which provided Lehman a competitive advantage. 95% of Lehman's employees accepted job offers distributed by Nomura. It really is very important for Nomura to effectively utilize the expertise and knowledge bottom part in order to enhance its business prospects and also achieve economies of scale by source of information integration.
Weakness- Nomura had a need to protect its real human capital leading to high worker costs right at the outset very much in line with Lehman custom of maintaining higher pay outs. Nomura also needed to build its client franchise from scratch given its insufficient occurrence in the EMEA region and also challenge a growing reluctance from clients to operate with a comparatively fresh and un-proven broker-dealer. In addition, it initially experienced the baggage of the Lehman bankruptcy, which managed to get extremely difficult to convince clients and regulators as well concerning its viability as a solvent counterparty.
Opportunities- You can say that the recent credit turmoil provided Nomura with a unique potential client of re-inventing itself. On top of that Nomura's traditional Asian edge allowed it to force its franchise a lot more aggressively having added ability from Lehman. Nomura currently has a sound platform to kick off a strong client-focussed business. Joint procedures will generate synergies and make higher income as Nomura can be affordable in running combined operations. It has a diverse set of services as well as workforce which can help them specialise in market market segments as well as create progressive products in investment banking.
Threats- Market conditions are volatile across European countries while recovery in the Americas has been painfully steady. Nomura is constantly on the sustain high operational costs. Although Nomura is frantically looking to mould itself into a worldwide player the natural cultural clash remains, which could de-motivating for the employees.
Source: http://n. ethz. ch/student/rebibr/projects/Lehman-Nomura. pdf
Organisations have to change in order to remain competitive. Changes within an organisation's environment in terms of competition, new clients and diversity in workforce push an company to make changes to its culture. However these changes are significant to Nomura's goal to become world-class investment standard bank. Organisational change signifies any alteration to existing cultural fabric of the organisation. It happens whenever a company keeps growing and going right through evolution in terms strategy. Nomura is implementing a behavioural method of change i. e. it's a planned change and ' it increases communication, group behaviour, management skills, and power relations by changing employees knowledge, skills, interactions and behaviour as well as the organisational culture. '(Gordon, Pg. 460) The Organisational change was done in four Phases:-
Phase 1-Retain Lehman employees in order to efficiently run the purchased business.
Phase 2- Integrate infrastructure as Nomura took over Lehman's Information Technology (IT) platform and Global Services in India.
Phase 3- Making sure that the blended infrastructure and Procedures are running effectively.
Phase 4- Joint procedures will generate synergies and create high profits.
Source: http://www. nomuraholdings. com/investor/summary/financial/data/2009_2q_leh. pdf
Compensation Structure- Nomura is wanting to follow Lehman's payment structure of paying high performance bonus of its employees in line with global investment banking criteria. Although Nomura's old employees were given a selection to choose Lehman's compensation structure of low basic pay and high performance bonuses. Over 50 % of their old staff chose the Traditional western compensation system which is very different from the original Japanese pay framework.
Job Security- Earlier Nomura's employees got a better job security although settlement levels were average and incredibly different from the Wall Streets philosophy. With the existing framework the employees would be offered performance-based bonus products and higher total settlement although the work security would be relatively absent.
Complex Matrix- It includes adopted a intricate Matrix type of organisation structure to achieve flexibility and quick decision making.
Decision Making- Regional and Divisional managers are given more delegation. Usually decisions were used groups.
Managerial Changes- Customarily most of the older managerial positions were treated by Japanese but recently three non Japanese Managing Directors have been appointed who are ex Lehman staff.
Changes in Job Scope- In the past positions were determined according to age group and seniority and now more emphasis is based on the expertise of the employees and their performance.
The takeover of Lehman by Nomura looks like a reverse takeover as Nomura is wanting to follow Lehman's Organisation civilizations alternatively than super-imposing its own culture. It is because it realises the value of the ex girlfriend or boyfriend Lehman staff as they can provide them a competitive border over other investment banks. Therefore its ensuring the former mate Lehman staff is satisfied working at Nomura so that they can perform well and stay in the job. Another reason for implementing these changes could be that in the past Nomura had made some failed makes an attempt to extend its business operations outside Japan.
The change process of Nomura could be described with the help of Kurt Lewin Model. The model details the change process in three periods which are as follows:-
1. Unfreezing- Creating knowing of a dependence on change and create the right environment for change. Offering old Nomura's employees an option to improve their compensation framework is a method of unfreezing as its more aged employees realise that their counterparts from Lehman will be earning higher. This may have put pressure on Nomura's employees to perform regarding to Lehman's objectives and so forcing them to change to the new culture.
2. Change- Making the change. In Nomura this was done through changing its management composition, educating employees and motivating those to interact as a team. THE PRINCIPLE Operating Officer (COO) of Nomura, Mr. Takumi Shibata acknowledged that there have been cultural variations in integrating both companies nonetheless they were focused to work as one team, one organization.
3. Refreezing- A firm has to cement the change and make it its company culture. In Nomura's circumstance, they remain undergoing change as the takeover took place only annually and half back. However the improvement so far achieved has been believe it or not magnificent given the hard line differences and size of operation.
Source: http://www. mansis. com/freeze. htm
Nomura Annual Article 2009
"Company development is a system-wide program of behavioural science knowledge to the organized development and encouragement of organizational strategies, constructions, and processes for enhancing an organization's success. "(Cummings and Worley, Pg 2)
Nomura believes in upgrading the abilities of its employees through its staff development programmes. This is done so an employee's probable could be maximised at the job. Employees receive authority to demonstrate their skills, talents and they're evaluated based on their performance. In order to enrich the careers of its employees Nomura initiated complete education and training programmes. In 2006, it launched a Happy profession and life job which targeted to help its employees maximise their potential.
Nomura initiated training in global business etiquette in seven of its offices worldwide including Japan so the employees could understand the dissimilarities in culture and history. This was done to increase responsiveness among its employees in order that they understand the importance of building romance with customers and fellow employees. In 2008, Nomura set up 'Diversity and Inclusion' offices in Europe and Asia Pacific. 'Variety and inclusion is about respecting human privileges and offering identical opportunities within organizations regardless of gender, age, contest, faith, or beliefs and harnessing individuals' skill. '(Nomura Holdings Website) This program was presented to unleash employee probable and capitalize on value. Under this Nomura's Human being Resource department will analyse the HR operations such as campaign, recruitment and performance management so that their diverse workforce is well supervised. In order to prevent discrimination predicated on age, race and gender Nomura organised 29 training sessions and over 14, 000 employees went to working out. Nomura in addition has created support systems because of its female employees in conditions of demonstrating more childcare leave and offering advice about the day treatment expenses of newborns.
Source: http://www. nomuraholdings. com/csr/stakeholder/employee/diversity. html
http://www. peoplemanagement. co. uk/pm/articles/2010/04/investment-bank-nomura-launches- multi-strand-equality-strategy. htm
Nomura's long-term aim is to become a Top notch investment bank. After the acquisition, Nomura has achieved market profits in Asia (excluding Japan) and European countries. These are aggressively building business in america market. Nomura's income from marketplaces outside Japan has increased significantly following the acquisition of Lehman Brothers businesses in European countries and Asia. Net revenue from its Asia and Europe division's surpassed Japan in two of the four quarters for the very first time. Obviously the integration has benefited Nomura as its income from its abroad operations has increased significantly. The Acquisition has generated immense synergies and it's really helping Nomura to achieve its goal of becoming a World School Investment Bank. Both firms complement one another in terms of products, physical locations and customers. Till now the acquisition has became a good one but in the long term Nomura must address to a lot of challenges in terms of culture while keeping balance between American and Japanese culture to keep its new as well as its old employees satisfied. It was possible for Nomura to preserve ex Lehman employees as when the takeover took place as the marketplace conditions were bad but after the market conditions stabilise employees might look for greener pastures. Therefore, Nomura must a task of retaining its employees in the long run as employees are its biggest investments.
Source:http://www. financeasia. com/News/174347, nomuras-emergence-as-a-global-investment-bank. aspx?refresh=on
Most of the success reports on Wall Street have been of businesses following a singular cultural beliefs across their businesses. But the sweeping changes at Nomura have been largely well received by its employees, the company is quite a distance from realising its potential in the market-place.
It must inculcate the performance-based settlement spirit between its Japanese employees while at the same time counting on Japanese practical wisdom of conservatism. Also behavioural changes in conditions of better group dynamics, equal-opportunities irrespective of race, gender and get older should be inculcated given the largely male dominated Japanese contemporary society.
Nomura should take the culture change little by little as it must keep its employees in Japan in high spirits. They could feel less motivated and feel that new employees will be more important to the business.
Rather than the top management deciding how to change the company culture your choice should be taken collectively regarding all its employees.
Nomura should not get too carried away by the increase in revenues in overseas markets. It has to ensure that the upwards trend in revenue generation continues without the holdups.
Nomura shouldn't get too Americanized in terms of risk undesirable attitude. American banking approach allows professionals to take risks which is often very disastrous. It should follow an assortment of Japanese risk averse and American risk negative attitude in other to run the operations efficiently without the turbulence in these volatile monetary conditions.
Lastly, there should be team building activities where new and old employees should play an active part. Both old and new employees should work together as a team in order to make Nomura a successful global investment lender.