Management people and organization (Case study: First National Bank) - Essay Example

? Management people and organization (Case study: First National Bank) Contents Contents 2 Introduction 3 Section First National Bank: Leadership and Organizational Transformation 3 Theoretical concepts: Leadership and emotional intelligence 6 Application of theoretical concepts on FNB 9 Merits 9 Limitations 11 Section 2: Organizational challenges to FNB in next 5 years in changing global context 13 Recommendations: next phase of FNB’s development 16 17 Conclusion 19 References 21 Introduction The First national Bank of South Africa has been effective in improving its financial performance since its inception. The performance of FNB Metro has been poorer than that of the FNB Rural which brought about the need for organizational restructuring and changes in the leadership structure. After the change of the leadership in the organization, FNB took the initiative to implement the inspirational leadership model and bring about changes in the organizational culture that was expected to increase the business performance. FNB has so far been result driven in their management approach. However, the changes in the organizational structure and implementation of the inspirational leadership model were expected to motivate the workforce and establish a better way of management control. The management and the leadership structure at FNB started to undertake actions that stimulate the emotional needs of the people and urge them to contribute more effectively for improving the business performance. Section 1: First National Bank: Leadership and Organizational Transformation The First National Bank ranks among the top list of banks in South Africa. The organization runs its business in the industry of banking that caters banking, insurance and health finances to the people of South Africa. Since the formation of the First National Bank, the organization has been catering financial services to the people of South Africa and has achieved a return on equity over the years. First National Bank (FNB) has been catering mainly to the retail sectors through its two divisions, namely the FNB Rural and the FNB Metro. Since the time of its inception, First National Bank attained excellent financial performance mainly due to the demands of the retail sector in South Africa. However, it could be observed that the performance of FNB Rural flourished while the FNB Metro was not doing well in the banking business in South Africa. In order to develop the performance of the Group, special attention was provided in the transformation of organizational structure and leadership of the organization (Bratton and Gold, 2007, p.94). The organization appointed new CEOs for the two divisions that look at the rural as well as the urban business. The leaders of the First national Bank emphasized on restructuring of the organization that produce bright result for the bank. The earnings per share of the bank increased which was mainly due to the cost cutting approach undertaken by FNB’s rural and metro division. Apart from the cost cutting initiatives of First national bank, the leadership focussed on increase in revenue generation in order to stimulate the growth of the profits. This led to the importance of customer service. The efforts for improvement in customer service brought about the transformation of leadership in the organization. The leadership structured envisaged that high level of customer service could be attained by the inspiring the employees of the organization and investing for the growth of knowledge and expertise of the employees. This was difficult especially after the restructuring of First National Bank and decline in trust between the management and the employees due to the cost cutting policies. The bank spent an amount of R 12 million in order to carry out the inspirational leadership program under the module of VUKA that involved external consultants and around 8000 employees of the bank. This was a wake up call for the employees and every employee was included in the program. The employees were made to experience the impacts of the transformation of the new culture that focussed on improved customer service. This was the objective of the inspirational leadership program (Bratton and Sawchuk, 2010, p.74). The VUK program as the indicator of the process of transformation to inspirational leadership was conducted in two phases. In the first phase, the employees participated in the activities that included breaking of barriers, emphasized on accountability, leadership and aligned them with the new vision of the transformed work culture. In the subsequent days, the branches of First National Bank continued the exercises undergone in the VUKA programme in order to integrate the practices proposed by the structure of inspirational leadership to establish a new work culture (Watson, 2010, p.69). The people of the organization agreed that First national encouraged diversity in the workplace and also focussed on the development of the community in which they existed in South Africa. The transformation of the inspirational leadership structure in FNB was running well in 2005. After 2005, the organization was again restructured with the amalgamation of FNB’s retail division and the corporate business. However, the transformation to inspirational leadership was maintained at FNB. The employees were required to undergo meetings in the branches of FNB which facilitated the communication and co-ordination among the employees, exchange of shared value and feedback on overall improvement of the aspect of customer service. Although the employees were inspired by the leadership to provide inputs and share knowledge among each other, the strategies for improvement of customer service were designed by the management and the leadership team. Theoretical concepts: Leadership and emotional intelligence In order to attain effective inspirational leadership in First National Bank in South Africa, the leadership structure needed to understand the exact impulse that rejuvenated the employees of the organization. The leadership style to be adopted by First National Bank management body was appropriately derived from the theoretical concepts of leadership and emotional intelligence. The framework of spiritual leadership model could be discussed in this context that addresses the emotional needs of the employees. By addressing the emotional needs, the employees could be inspired to work towards the goal of the organization by following the instructions of the leadership to meet the objectives of the company. The theoretical frameworks of the management and spiritual leadership models have been compared in the table as given below (Rees and Metcalfe, 2003, p.162). The management leadership model includes the goals and objectives of the organization, the plans, strategies and the priorities of the management. The structure of the organization, team formation strategies, management of people of the organization and the efforts for problem solving are important for transforming the business process and attain higher focus on customer service. In the management leadership model, the leadership team has to have a vision for attaining the goals of the organization. The organization should have a healthy culture in the workplace and ensure a culture of collaboration in the workplace. The leadership and the management bodies aim to strengthen the network between the communities and the stakeholders. The high collaboration between the stakeholders of the organization helps to strengthen the sharing of information in the organizational network. The spiritual leadership model establishes that the function of the management are based on the spiritual values of oneness, attainment of inner peace, sense of respect towards the colleagues and the customers and commitment to service to the end users of the business. The various factors that are taken into consideration for transformation to inspirational leadership and emotional intelligence in the work place play a vital role in creating an atmosphere where the leadership takes care of its people and instils the aspect of self motivation with the focus on the performance of the employees. In order to inspire the employees, the leadership model looks to motivate its employees and assign responsibilities and accountabilities in their work roles (Kwiatkowski, 2003, p.385). The employees and the staffs are inspired with the prospect of career growth in the business. The theoretical concept reveals that the organizations are committed to result driven processes in the business. This does not mean that the people are not in the area of attention of the leadership team. The management of conflict among the people of the organization helps the leadership team achieve high output with the functioning of a closely linked organizational structure. The leadership structure inspires the employees to be open in their working style and share information with their colleagues. The leadership style believes in giving recognition to the people who follow their leader and produce the desired output and at the same time maintains the level of customer service. The share values, knowledge, tasks and leadership in the organization enables them to integrate the people and the process which leads to high quality of content produced and deliver improved customer services. The inspirational form of leadership brings about the transformation in the work place by integrating the management and spiritual approach and supporting the employee to perform under the new work culture where equal importance is laid on people development as well as content development (Richards and Manchester, 2000, p.275). Application of theoretical concepts on FNB The theoretical concepts of inspirational leadership and emotional intelligence could be applied in the context of First National Bank in South Africa. The application of the model as shown in the diagram given below depicts that FNB has organized inspirational programs and meetings where the employees have been asked to share their own experience and the external consultants have inspired them to integrate their experience with the work culture and participate in the process of development of customer service (Parrington and Harris, 1999, p.695). Merits The application of the theoretical concepts of the inspirational leadership could provide us with the insight that the transformation of the organizational structure and the implementation of the inspirational leadership have benefitted the organization to meet the requirement for running a sustainable business in the financial markets of South Africa. The inspirational programs implemented to motivate the employees encouraged spontaneous contribution from the workers for development of customer. The organization followed the policies of allowing diversified work culture in their branch which increased the quality of opinions from the employees for making necessary changes in the existing process. The transformations brought about by the inspirational leadership have been depicted in the diagram given below. The leadership style in First National Bank did not follow the path of a dictator and equal attention was given for taking care of the employees. In the earlier stage the management and leadership model at First National Bank laid emphasis on the result driven processes of business. The inspirational leadership brought about transformation in giving due attention to the interests of the people who are frontline workforce for achieving the business goals (De Witte and Muijen, 1999, p.500). The balance achieved in the people development and content development allowed the organization to create a healthy work culture where special emphasis on the customer service was laid. As a result of the increase in customer service, First national Bank has been able to enhance the brand image of the organization. The mutual trust between the financial services of the company and the customers increased which laid to the increase ion sale of the financial products. The revenue generation increased in FNB as a result of the implementation of inspirational leadership model that provided increasing profitability to the bank. Limitations The South African business industry consists of diverse culture due to the presence of companies from various parts of the world like Europe, Africa, etc. A snapshot of the industry environment in terms of business representation from the various parts of the world has been shown in the diagram given below (Grundy, 1998, p.31). The people or the customers in South Africa belong to various racial backgrounds. Thus the customers in the South African markets are diversified in terms of value, culture and belief. The inspirational leadership style followed in First National Bank have followed the people oriented approach with the ultimate objective of increasing the revenues of the organization through better customer service. The share leadership values have been incorporated in the organizational culture every employees has been included in the inspirational programs aimed at motivating the employees to excel in the area of customer service. The long term interests of the organization have been integrated with the long term career prospects. Although every individual employee have been included in the workforce, the diversity in the cultural values, knowledge and beliefs, thoughts of the employees have given rise to diverse opinions of the employees. When some employees accepted the leadership model happily, other employees raised doubts about the effectiveness of the inspirational leadership model in First National Bank. It was believed that the inspirational model has not been effective at all hierarchal levels of the organization (Mazzucato and The Open University, 2002, p.45). The ground staffs especially felt that the inspirational leadership model has not been able to reach them due to the shared values of leadership and the difference in the outlook of the managers in percolating the culture and belief of the leadership teams. Section 2: Organizational challenges to FNB in next 5 years in changing global context The organizational challenges to FNB in the next five years in the changing global context have been explained as follows. The age of globalization has led to the spread of financial services all over the world. The global markets have been opened to foreign investors and the investment in financial services has started to increase as a latest trend in the South African economy. The financial services industry in South Africa is likely to witness high level of competition due to the increasing inflow of a large number of foreign players. The increase in privatization would also lead to formation of more private banks in the same markets of South Africa where the First national Bank branches are present. The transformation of leadership brought about by the implementation of the leadership model would face challenges in stimulating the emotional needs of the employees and inspiring them to work in line with the organizational policies. The increase in the level of competition in the industry would bring about changes in the business environment with more number of financial service providers experimenting with the transformation of the leadership model to inspirational mode. There would be more number of organizations who would come up with the inspirational leadership models of motivating their people to improve their customer service. The duplication of the leadership models in the industry would pose challenges to FNB in the next five years as the organization would start to lose their cutting edge over the other market players. FNB would find it hard to bring up the emotional quotient of the employees as the employees would have more options of employment where the processes add due weight-age to the people development. Thus FNB would face the challenge of employee attrition and would make the task difficult for the leadership structure to inspire their employees for meeting the expectations of organization. The inspirational leadership of FNB has the plan to include more number of real South Africans in the system (Verweire and  Berghe, 2004, p.48). The strategies of inspirational leadership aimed at integrating all the communities and bring about enhanced collaboration among its stakeholders. The efforts to include all the members of the community have led to the increase in people from various racial backgrounds. The employees who would join FNB in the next five years are from different communities of South Africa. The manpower would differ in terms of culture, value, idea and beliefs of the several communities. FNB would face challenges in bringing the people from different racial backgrounds to a common platform. The organization would face challenges in fostering the culture of team work. It would be important that FNB looks to attain a coherent work culture with the participation of each and every employee in the workforce (Abrams and Abrams, 2003, p.42). The inspirational leadership model encourages the employees to share knowledge and information among each other. It would be challenging for FNB in the next five years if they are not able to inspire their workers in working for the common goals and have respect for their colleagues in the workplace. The mutual respect between the people of the workforce holds the key to work efficiently as a team and attain high quality of product and service output. In the changing scenario over the next five years, the leaders and the manager would face more difficulty in inspiring them to follow their instructions. The choices available to switch employers would make the implementation of the inspirational leadership model to be more difficult. The succession planning model would gain more importance in the inspirational leadership functions as the employees and the people would tend to attach more importance to long term career prospects in the organization and the rewards and benefits that could be obtained from the long term service (Hill and Jones, 2009, p.12). The absence of succession planning strategy could pose major limitations to the inspirational tactics applied by the management in their leadership model during the next 5years. The transformation of the leadership model towards inspirational leadership would encourage diversity increasingly with time. The diversity would be encouraged not in terms of culture and race only but also in terms of thoughts, innovation and important ideas for improvement. Over the next five years it is expected that due to the inspiration and the encouragement of the leaders, the people of the organization would tend to challenge the dominant logic due to the need of recognition, reward, promotion and career advancements. This is likely to see a great deal of engagement of the workers and the staffs in the areas of research and development, innovative efforts, etc. In absence of effective management and clear articulation of the objectives of inspirational leadership, this may be challenging for FNB in the next five years as there may be ample unproductive work and the organization may deviate from the result driven goals over the considered time period (Marr and Gray, 2012, p.57). FNB would, therefore, face the challenge to balance the objectives of people development and content development. FNB would need to maintain equal focus on inspiring its people to follow the leaders and at the same time encourage them to participate in the process of innovation and continuous development to meet the organizational goals in the next five years. Recommendations: next phase of FNB’s development The next phase of development of FNB over the next five years could be recommended from the theoretical concepts of MPO. The application of the theoretical concepts of MPO requires the First national Bank of South Africa to address the needs of the management, the needs of the physical labour or the manpower resources and the emotional needs of the workforce. The needs of the management could be fulfilled through proper planning, organization of resources and the implementation of the tasks that would achieve the result driven objectives of the organization. The organization should believe and share the idea with the physical labour or the manpower resources that the desired results of the business performance of FNB could only be achieved through wholesome involvement of its people in the business process (Fitzroy and Herbert, 2007, p.51). This could be achieved in the next phase of development by addressing the emotional needs of the people of FNB. The emotional needs of people could be fulfilled by inspiring them to work as stakeholders of the organization who contribute to the decision making process. The organization would need to encourage its employees with methods of succession planning and assign more responsibilities and accountability for attaining high career growth. The leaders would need to offer reward and recognitions to the employees who comply with the instructions of the supervisors and take active part in providing in providing innovative ideas for process improvement (Pearce, 2009, p.48). The leadership tasks would require balancing the objectives of First National Bank in developing the process as well as its people. The development of the leadership structure would follow the above mentioned cycle which is aimed at managing the people as well as work in order to balance the development of the people as well as the content. The next phase of development through inspirational leadership in FNB includes clear articulation of the objectives of the organization in achieving the results of their business in financial services as well as managing people by inspirational mechanisms. The improvement in the business performance of FNB need to be forecasted and a risk-return analysis needs to be carried out by the organization. This involves measuring the benefits of the inspirational leadership and the limitations of the process of encouraging diversity in the work place. A proper plan needs to be designed which should be followed by the leaders and the managers in motivating its people (Sekhar, 2009, p.70). The leaders and the managers should be efficient in organizing their teams and communicating the strategic transformations to be implemented in the organizational functions over the subsequent phase of development. The long term view of FNB towards sustainable development in financial services in the South African markets and the advantages of long term relationship with the stakeholders would be explained to the employees. The leadership structure would co-ordinate as well as controls the activities of the manpower resources in various departments like marketing, finance, operations, etc for achieving a balance between the result driven goals and the management of the people of FNB (Witcher and Chau, 2010, p.85). In the next phase of development, the leaders and the managers should be ready with answers to all questions of the people in the workplace. This would help FNB to remove confusion in the work process and maintain transparency on the rationale behind the transformation of leadership functions in the organization. The increase in networking between the stakeholders of the organization and the increase in interaction between the work place communities would help FNB to foster the growth of mutual trust. The employees would be inspired to be more productive and discover innovative ways to increase the business performance as they would find themselves aligned with the long term goals of the organization. The leaders in the next stage of development and organizational transformation would look to inspire their employees to contribute more towards the increasing the performance of the business. The management of FNB would need to be supportive in their approach of managing the people. The leadership style should not follow the actions of a dictator but would need to co-ordinate with the employees in order to motivate them for producing the desired output (Farnham, 2010, p.72). The establishment of the cycle of culture in workplace as given below is extremely important from the prospects of development in the next phase for FNB. The First national bank of South Africa is likely to face the conflict between the people involved in the management of process and its people or the organization. In a workplace that would encourage diversified ideas, innovation and growth of the employees in the long term perspective, there would be difference of opinion in view of the changes implemented in the course of process development. The differences in recognition of the people are also likely to create differences in approach in the work place. For this, FNB is required to establish a cycle of culture which gives equal importance to all its employees and their opinions. The expressions of the different behaviour and attitude have to be integrated into a common behaviour in the workplace which could be achieved through effective governance of the management (Tricker, 2012, p.39). A healthy workplace culture and organizational code of ethics for FNB has to be developed in order to integrate the workforce under the inspirational leadership structure for achieving sustainable business performance in the market. Conclusion The transformations in the organizational structure and implementation of the inspirational leadership model are sure to provide certain merits as well as limitations for First National Bank of South Africa. Over the next five years, FNB is likely to achieve a diversified workplace with employees belonging to several races of South Africa. 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