JP Morgan Chase 2015 Annual Report Download - page 28

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With all the new rules, committees and centralization, how can you fight bureaucracy
and complacency and keep morale high?
In the reality of our new world, centraliza-
tion of many critical functions is an abso-
lute requirement so that we can maintain
common standards across the company.
Of course, extreme centralization can lead
to stifling bureaucracy, less innovation
and, counterintuitively, sometimes a lack
of accountability on the part of those who
should have it. Our preference is to decen-
tralize when we can, but when we have
to centralize, we need to ensure we set
up a process that’s ecient, works for the
customer and respects the internal colleagues
who may have lost some local control.
Processes need to be re-engineered to be
ecient. So far, our managers have done a
great job adjusting to their new roles and,
in eect, getting the best of centralization
without its shortcomings. When, on occa-
sion, new procedures have slowed down our
response rate to the client, we quickly set
about re-engineering the process to make
it better. While we are going to meet and
exceed all rules and requirements, we need
to ensure that the process is not duplicative
or that rules are not misapplied. For example,
adhering to the new KYC rules took us up
to 10 days to onboard a client to our Private
Bank. But today, after re-engineering the
process, we are back down to three days,
incorporating enhanced controls. We all need
to recognize that good processes generally
are faster, cheaper and safer for all involved,
including the client.
People should not just accept bureaucracy — they
have the right to question processes and the
interpretation of rules. We have given all our
people the license to question whether what
we are doing is the right thing, including
the interpretation of rules and regulations.
Very often, in our desire to exceed regulatory
requirements and to avoid making a mistake,
we have inaccurately interpreted a rule or
regulation and created our own excessive
bureaucracy. This is no one’s fault but our
own. Everyone should look to simplify and
seek out best practices, including asking our
regulators for guidance.
Committees need to be properly run — the chair-
person needs to take charge. We have asked all
our committees to become more ecient. For
example, we should ensure that pre-reading
materials are accurate and succinct. The
right people need to be in the room and very
rarely should the group exceed 12 people.
An issue should not be presented to multiple
committees when it could be dealt with in
just one committee (remember, we have new
business initiative approval committees,
credit committees, reputational risk commit-
tees, capital governance committees, global
technology architecture committees and
hundreds of others).
We have asked that each chair of every
committee take charge – start meetings on
time, make sure people arrive prepared and
actually have read the pre-read documents,
eliminate frivolous conversation, force the
right questions to get to a decision, read the
riot act to someone behaving badly, maintain
a detailed follow-up list specifying who is
responsible for what and when, and ensure
the committee meets its obligations and time
commitments. And last, we encourage each
chair to ask the internal customers if he or
she is doing a good job for them.
We have maintained high morale. Our people
have embraced the new regulations and are
working hard to become the gold standard
in how we operate. We don’t spend any time
finger-pointing or scapegoating our own
people, looking for someone to blame purely
for the sake of doing so when we make a
mistake. And importantly, we have main-
tained a culture that allows for mistakes.
Obviously, if someone violates our core prin-
ciples, that person should not be here. But as
you know, there are all types of mistakes.