The Performance of the Banking Major of Australia and New Zealand - Case Study Example

Case Study Table of Contents Introduction 3 Company History 3 Problem Definition 4 Organisational Transformation 4 Information and Measures 6 HR Practices at ANZ Bank (Alternate Solutions) 6 Recommendations 8 Conclusion 9 Bibliography 10 Introduction It is rightly observed that the word ‘change’ is the only constant thing in the present world of today. With the advent of information technology and communication process, the tricks and the terms of trade have been changing quite fast. The traditional ways of trading no longer reaped the expected returns for the business houses. The financial services companies all across the globe are largely affected with such paradigm shifts. The influential factors of globalisation have turned the world to be a smaller place to live in. The revolution of internet has significantly affected the ways of doing business for the banks. The customers of the banks could transact from their computers even without going in to the banks with the help of the internet. Such changing mechanisms of operations turned change management as the top priority for banks all over the world. Such changes invariably called for major steps to be initiated on part of the banks to be aligned with the modern ways of doing business. ANZ Bank of Australia and New Zealand was not an exception either. Company History ANZ Bank is regarded as one of the ‘big fours’ of the New Zealand and Australian banking system. Established in the year of 1835 as The Bank of Australasia, the bank commenced its operations at London and was under the purview of Royal Charter. The present name of ANZ Bank was coined in 1951 when the Bank of Australasia merged with the Union Banks of Australia and other Anglo – Australian banks. Problem Definition The bank had been performing quite well until the last decade of the last century when several changes in the external as well as internal environment of the financial institution resulted in series of poor performances. The management of the bank appointed John McFarlane as the new Chief Executive Officer to review and initiate measures for the performance improvement of the bank. Organisational Transformation After a decade long poor performance in the 1990s, the ANZ Bank successful transformed its performance in the new millennium under the able leadership of John McFarlane. The new CEO of the bank called for overall transformation that called for comprehensive change in attitude of the reputed bank. Being into the business of financial services, John McFarlane rightly realized the necessity of having a human face for the success of the business. As it happens in the service sectors all throughout the globe, along with the four Ps of marketing (price, product, place and promotions), the other factors like physical environment and the people also plays crucial role. At the very outset, the new CEO aimed at transforming the mentality and the attitudes of the ‘people’ i.e. the employees of the bank. John McFarlane aimed to provide the services of banking with increased compassion as he termed the aim to be ‘the bank with a human face’. It is regarded in the present industry of human resource management that human capital is the most important factors of production for a company to attain the desired success. It is so because the organization can get all other factors as and when recovered but the efficient human capital once lost, cannot be replaced. Hence, increased importance was laid upon involving the employees with the transformation. The organizational transformation, that was carried at ANZ Bank and that successfully transformed it into profit making financial institution, was basically threefold and included the factors of: Perform Grow Break – Out The first factor of ‘Perform’ was aimed at the core objectives of better financial performance and higher shareholder value. The next factor of transformation was targeted towards strengthening brand, leadership and most importantly the revenue. The third factor of transformation had the objective of sustainable leadership which would aim at long - term success. Information and Measures The information available for the analysis includes poor performance of the bank and the report prepared by McKinsey. The leading consultancy service provider of the world, McKinsey analysed the position of ANZ with that of the eleven high performing Australian companies and it was observed that the bank performed considerably well in the areas of operations and financial performances. But the bank took a major hit in living up to the values proposed by themselves. The study revealed that the bank should perform self-analysis. The leadership of the bank felt that it was high time that the banks gets into the ‘Perform, Grow and Breakout Strategy’ so that they can make up the lags and achieve the lost place in the industry. HR Practices at ANZ Bank (Alternate Solutions) With the falling performance of the bank and the studies conducted by McKinsey and other internal teams under the leadership of John McFarlane, it was observed that ANZ had major drawbacks in terms of human resource management. The experts of the industry felt that the bank never laid emphasis upon the human resource strategies that often led to wrong people at the wrong position. The new CEO of the bank increasingly felt that having not the apt human resource at the desired position proved fatal for the bank. The new management initiated number of measures that was directed to amend the shortcomings of the financial institution. The various fields in which the ANZ Bank provided increased emphasis were as follows: Cultural Transformation – It was identified at the outset that the prime problem of the banking major ANZ lied with the attitude of the employees. In other words, it was the organizational culture that made the bank basically suffer. The experts felt that the banking company did not abide to the values that it propagated which resulted in utter confusion and erosion among its customer base. The new management of the bank led by John McFarlane promoted breakout workshops (to focus upon personal development and emotional up-liftment of the employees), breakout charters (aimed to elaborate the change in processes) and breakout consulting (to enhance consulting services). Performance Management – Performance management is another important measure that the bank management thought to solve the problems of the depleting performance of the bank. Performance management is essentially linked with the reward management. The purview of performance management is extensive of all the positions of the banks that includes from the managing directors to the front office and the sales executives. ANZ Bank used performance management mechanism with the help of the Balance Score Card that depicted the KRAs (Key Result Areas) for the employees. The KRAs, in the case of ANZ Bank, focused their performance on the four important aspects of finance, customers, people and community measures. In order to motivate the employees with better performance, payment of yearly bonuses were inducted within the system. Talent Management – Talent management has been another important measure that was initiated within the system by the management of the bank. The measure basically focused on the fact that the right persons are inducted at the right positions at the right time. In order to have greater efficiency, the bank identified top 100 performers and they were externally evaluated. The important measure that was initiated was ‘pay for performance’. The employee pays were made directly proportional to their performance. Employee Engagement – The bank could keep the employees engaged under the efficient leadership of John McFarlane and his team. In fact, the engagement of employees was one crucial factor that turned out to be one of the chief differentiators in the sea – change of performance of this reputed financial institution. Earlier, the bank employees were not living up to the expectations of the customers as they were not sure of the promises that the bank made. But with immense faith upon the new management, things improved greatly which were very clear from the ‘Best Employer Study of 2004’ by Hewitt’s Associates. Recommendations In order to ensure long term profits, the companies of today have to resort to continuous development and upgradation. The world is fast changing and to adhere with such changes, constant improvement is the key. Along with core competencies, many other factors have erupted that holds the key to sustainable developments of the companies. Same is applicable for ANZ Bank. The bank should provide increasing importance to team work. As it happened with traditional financial institutions, the ANZ Bank relied much on information control. But in order to have better performance, it is important that the bank inculcates more openness within the system. The customers are the most important part of any organization. The ANZ Bank should focus more upon customer service so that the number of satisfied customers increases. Also, it should provide due emphasis upon technological innovation. Conclusion The performance of the banking major of Australia and New Zealand, ANZ Bank, improved by great extent as John McFarlane initiated the required changes within the system and process of the financial institution. The case study once again validated the fact that the people power and the human capital are the most important factors for the effective and efficient performance of any organization. Bibliography ANZ, No Date. Facts. Our Company. [Online] Available at: http://www.anz.com.au/about-us/our-company/profile/facts/ [Accessed March 21, 2010]. Cartwright, J. Cultural transformation: nine factors for continuous business improvement. Prentice Hall, 1999. Stahl, G. K., No Date. Talent management: Building and sustaining a strong talent pipeline. INSEAD Knowledge. [Online] Available at: http://knowledge.insead.edu/contents/stahl.cfm [Accessed March 21, 2010]. University of Virginia, No Date. University Human Resources Performance Planning & Evaluation Handbook. Performance Management Guide. [Online] Available at: http://www.hrs.virginia.edu/forms/perfmgthandbook.pdf [Accessed March 21, 2010]. Read More