Citibank to their CIO - You’re Fired!?
It was reported yesterday that Mitchell Habib, the CIO of Citibank NAIT resigned. Whether he was outright fired or asked to resign or did so on his own volition is still unclear. Rumors are flying now as to the reasons why but I will let the dust settle before I start reporting on them.
Why report this on there
blogging? Well it has to do with what we do know and the “People” portion of the triple bottom line. First some background:
blogging? Well it has to do with what we do know and the “People” portion of the triple bottom line. First some background:Mitchell Habib came out of GE Medical Systems (GEMS) and was trained a la Jack Welch (a man whose business acumen I greatly respect). Apparently Habib had a great track record of getting results and cutting cost. While there, he outsourced most of technology to TATA Consultancy (TCS) of India. The contract was estimated to be valued at $120 million and involved about 1,000 TATA employees. The cost savings were projected at 50% of expenditures.
Then from what we have pieced together, Mr. Habib came to CitiCards. Citigroup’s credit card division and followed a similar course of action. Citi liked the results and promoted him to CIO for Citibank’s North American IT. Following the same modus operandi he brought in TATA once again, this time with a contract valued at $500 million and involving some 2,200 TATA employees (as reported on CIO magazine). See the pattern? I am not criticizing. If you have a winning formula, use it. I am actually a proponent of outsourcing but within reason. No matter which side of the fence you sit on there is a hard cold reality. Outsourcing is here to stay and a result of the natural evolution of globalization and the relentless pursuit of profit.
What do we know of his more recent tenure at Citi? Well from reliable and confidential sources, we are told that he instituted a Top 10, Bottom 10 Methodology. Basically reward heavily the top 10% of performers and trim off the bottom 10%. Again I am not against this but the question is how do you implement it. Apparently someone forgot to read Jack’s play book. Jack himself is quoted saying that this methodology (actually 20-70-10) is essential in creating a high performance organization but that before you start trimming anyone, you have to, for an extended period of time, communicate powerfully and clearly to each employee where he/she stands and what they can do to move up the scale. If done properly you do not have to fire anyone. Few people like being classified in the bottom 10 and naturally choose to leave on their own. You can hear Jack say it on his weekly podcast The Welch Way.
Now let’s give Habib his due. He was use to the highly efficient culture at GE, so it must have been extremely frustrating to bring about any change in what is truly a global bureaucracy, whose culture has been conditioned to put internal politics before profit. So his resigning on his own is not that farfetched, especially if he was under pressure to produce immediate and significant results.
What else do we know? Well Citibank’s NAIT managers were given the proverbial handcuffs and told that they could not review the resumes of the incoming consultants and it was alleged that TATA managers themselves told Citi managers, “You have no choice. You take what we give you.” We all know how things get distorted through the rumor mill, so the accuracy of the statement can’t be verified. But what I can tell you is that no less than 9 different Citi managers related to me similar negative experiences.
OK so I hear you screaming, “What does this have to do with the People portion of the triple bottom line?” EVERYTHING!
How high do you think morale is now at Citibank NAIT? Do you think productivity is up? Well yesterday one manger reported to me the environment as being “dismal”. Very few projects are getting done. Here is a recreation of a recent status meeting as related to me: (names are changed to protect the innocent)
IT Manager: John Doe what is the status of your project.
John Doe: Red sir
IT Manager: What do you mean red? Your project should be half way through testing.
John Doe: But no testing is happening
IT Manager: So escalate it to the test manager
John Doe: I did but he said nothing can be done
IT Manager: What! Why not? If he does not have enough resources, let him test the software himself.
John Doe: Well he can’t because he is too busy looking for a job. He only has until the end of October or he is fired.
IT Manager: THATS IT! (He exclaims while raising his arms with an all too recent and growing frustration)
Most of the employees who have survived the 1st wave are either awaiting packages because they are close to retirement or are busy looking for work.
Could Citi have cut some of the fat and dead weight? Absolutely but this is not how you do it. Especially if you want to maintain some semblance of productivity. One of the managers and I were speculating yesterday at the odd behavior by senior management. It did not make sense. We felt that either NAIT was being destroyed by ignorance or the area was being readied for a bank merger. Granted Chuck Prince is under great pressure from stockholders (especially Prince Alaweed who owns about 10% of Citi) to lift the stock price, which has been stagnant now for 5 years but you can’t just plant a seed and scream at it to grow. Chuck has done an extraordinary job of cleaning up the mess left for him and in my opinion he is also authentic about the new vision that he is creating for Citi: To be the most respect financial services firm in the world.
Unfortunately Wall Street only looks at only one bottom line but the reality is that there is a huge cost associated with the low moral, very low productivity and a significant loss of intellectual capital. Citibank has some of the best and brightest. Too bad Citi doesn’t realize that its # 1 asset is not in the vault but instead carrying Citi ID cards.
I will report more on this developing story. Stay tuned and feel free to post your comments below.
Wednesday, October 25, 2006
YOU’RE FIRED!?
