1. What is the context within Nedbank when Ingrid Johnson arrives at Business Banking in 2005?
1) At that point, 11 years after Apartheid's end, both Nedbank and South Africa in geneal were immersed in a period of significant change. In 2002 Nedbank decided to merged with another South African bank (BOA) to improve its retail operations but they did it in the wrong moment (low confidence within financial marketplace). Troubles financing the acquisition and several ill-advised bets in the market caused Nedbank's market value to plummet, proving that the operation had definitely been a severe financial blunder for the company, leading to the ouster of the bank's senior leadership. As a result of this failure, the Nedbank's CEO was replaced in 2003 by T. Boardman, the previous BOA's CEO. Then he began a deep internal restructuring program to address tensions that had led to the merger with BOE. Among other steps, he decided to hire a consulting firm (McKinsey & Company) to enhance the productivity of the BB unit as well to assist it in the merger process. This consultancy drew up a report where recommended accomplishing profound changes in core issues such as performance and accountability culture or equality policy (this section was at that point the most white male-dominated in Nedbank). According to them, there were 4 chief peformance gaps:
BB'S market share had dropped 3%
high credit losses
plummeting of customer satisfaction to 4th position
Nevertheless, despite these warnings the status quo has scarcely ever changed by the time Johnson arrived at BB in 2005. Quite the contrary, most McKinnsey recommendations about empowering staff, streamlining processes, or tailoring relationships were still pending to be addressed clients needs within this division of concern.
2. What are Ingrid Johnson's main change management challenges when she arrives at Business Banking in 2005?
At that point, two diferent organizational cultures came into confrontation within the BB division as a result of the mentioned merger with BOE. But besides that, there was a general climate in which predominated ageism and genderism, with only three black people holding senior management positions. The division was organized on the basis of two functional silos, sales and credit, which operated “as if they were on different planets”, managed centrally from the Johannesburg corporate office. According to several executives' personal testimonies “a culture of ‘blame and shame’ had been built” in which the sales function was the dominant silo and where area and regional sales managers “acted like demi-gods”, demonstrating extremely weak accountability too. Given such a scenario, Johnson, after having several meetings1 and reviewing, along with her chief strategist, Andrew Watt, all of the strategic work and business plans for the organization, she uncovered a number of critical points:
• the bureaucracy was complex
• delivery was slow and poor
• accountability was, by and large, absent
• existence of a culture of “shaming and blaming”
• Superficial alignment between strategy, structure, skills, performance, and remuneration.
1With the outgoing managing director, the ExCo team and with individual ExCo members.
More particularly, one critical problem to address was, according to her, the serious lack of highperformance culture. In order to solve it she, along with Graham Dempster (managing director of Nedbank’s Corporate Cluster), decided to initiate a strategic renewal with an aim to introduce a new corporate culture and vision. In order to achieve this ambitious goal she needed to put into practice a global plan that would involve the destruction of the siloed, functional organization through a radical overhaul of the entire BB division; this would include: •
Culture and aspirations
Improve the black representation in BB’s senior management ranks...
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