J.P. Morgan Chase and organizational behavior: Path-goal leadership theory and conflict within the organization

Morgan Chase is the world's largest investment banking firm "with $2.3 trillion in assets, $1.1 trillion in deposits and approximately 260,000 employees" (Heineman 2013). Its wide range of services includes "investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, asset management and private equity" ("J.P. Morgan Chase," The New York Times). Investment banking firms which combine their services with standard commercial banking received a great deal of criticism during the credit crisis of 2008 for exploiting deregulation. In the case of J.P. Morgan, "through its subsidiary Chase Bank, the company has traditionally been one of the top consumer credit card issuers in the country. As expected, the firm has lobbied heavily on legislation that would affect the nation's financial industry, including bankruptcy reform and banking deregulation" ("J.P. Morgan Chase," Open Secrets). The organizational culture of firms within the industry category of J.P. Morgan Chase have had a negative reputation for promoting competition amongst employees in a manner that is disadvantageous to the interests of the ordinary consumer.

Several years ago J.P. Morgan was praised in the business press for giving an unusual degree of flexibility to its employees for an investment bank, rather than micro-managing them. J.P. Morgan has a very loosely-organized, loosely-governed structure, some might argue deliberately...

Morgan has been pieced together by large mergers and acquisitions, so its cultural silos could prevent the firm's best ideas from working their way through the entire fund complex" (Wherry 1). J.P. Morgan gained a reputation for hiring employees with experience and giving them greater autonomy to make ethical decisions in light of their experience; suggesting a more laissez-faire attitude towards management. In fact, one theory of leadership, called path-goal theory, suggests that in some instances it can be beneficial for an organization to change its leadership style, based upon the qualifications of the persons involved and their allotted tasks (Nelson & Quick 277). Along the lines of this theory, allowing highly competent persons who were very motivated (in this case by bonuses) to have leeway in a complex task might warranted.
During the crisis the firm was "opportunistic about hiring during that time, scooping up analysts with deep experience" and allowing them to have an unprecedented say in terms of the decisions they made (Wherry 1). This style of management, however, can have a downside, which is why laissez-faire is sometimes characterized as "a style of leadership in which the leadership fails to accept the responsibilities of the position" (Nelson & Quick 277). For smaller organizations this may be effective, but for large, sprawling organizations such as J.P. Morgan, "it must be led not by staff, but by business leaders who devote appropriate resources, hire outstanding people and…prevent, detect and respond [to] activities deeply…