55. "Environmental Change and the Search for Organizational Congruency in the U.S.A. Financial Services Industry"

ABSTRACT

This paper briefly describes the turbulent changes that have occurred since 1979 in the financial services industries of the United States. The pre-1979 environment for financial services was highly regulated by product, price and geography. The post-1979 environments have been rocked by waves of deregulation, competitor response, technological change, new products and services, new organizational arrangements and the rise of entirely new competitors.

To make some sense of this chaos, the concept of organizational congruency is introduced in order to provide a framework within which to systematically think about the issues facing this industry and each firm within it. There are two main types of congruency. The first is called structural/functional/environmental (SFE) congruency. SFE congruency describes the fit among the environments, the mission, goals, strategies, and tactics of the organization, the Organizational Technology and results. There are thirteen SFE congruency conditions. The second type of congruency is called bonding congruency. Bonding congruency describes the fit between the organization and its associates. There are seven bonding congruency conditions. A set of seven propositions are stated and justified for synthesizing both types of congruency. Each type of congruency depends upon the other. Both are necessary for maximum productivity in the face of dynamically complex environments. The processes of adaptation in the U.S.A. financial services industries are seen as the search for organizational congruency in response to environmental change.

This paper is the second in a series on organizational congruency. It begins with an introduction to the idea of dynamic complexity and the need for organizations to become efficiently adaptable. Following a review of organizational congruency, these ideas are applied to the design of a small electronics firm. Each stage of the organizational design process is illustrated by the case.