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South Africa’s First National Bank Report

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Introduction

Inspirational leadership has been an area of concern all over the world because people tend to seek a personal life that is not only meaningful but also one that has a particular work context attached. In the African context and particularly in South Africa, such a form of leadership has been in practice for a long period. However, in this country, leadership adopts a spiritual approach, which takes precedence in most of the areas.

The spiritual outlook of leadership has been in use forming a kind of tradition that identifies this form of leadership as significant in overcoming challenges that come along with business speciality, generality, as well as diversity. According to a review of the existing literature, it is hard to find organizations of African origin that are implementing the concept of African Leadership.

Nevertheless, several businesses in South Africa have in the recent future have adopted such changes but with the focus on a personal level. Despite such changes, these businesses are experiencing challenges in capturing the real picture of inspirational leadership, especially in the context of behavioural change within the businesses’ framework. This report, therefore, adopts the approach of a case study to analyze critically inspirational leadership as applied in South Africa’s First National Bank.

First National Bank

The topic of leadership has elicited a lot of concern all over the world. Despite such a scenario, the topic remains a one that many people find hazy and elusive. Avolio and Bass (2002) assert that leadership refers to the aspects of enabling, motivating, as well as influencing other people to work towards achieving an effective and successful organizational background. Nowadays, the concept of leadership tends to increase its value particularly when the focus is on the development of a work culture that is strong (Dasborough 2006).

Such a scenario allows an organization to design itself a form of work practice that is based on sustainability and high performance (Avolio & Bass 2002). Several debates exist on the possibility of leadership functions being linked to the organizational management. However, a review of the literature in management and leadership reveals that leadership involves motivation, change agents, charisma, and vision (Denton & Vloeberghs 2003). Christie, Barling, and Turner (2011) point out that management, on the other hand, involves coordinating, organizing, implementing, along with planning.

Inspirational leadership has been an area of concern all over the world because people tend to seek a personal life that is not only meaningful but also one that has a particular work context attached (Goethals, Sorenson & Burns 2004). In the African context and particularly in South Africa, such a form of leadership has been in practice for a long period (Havenga 2011). However, in this country, leadership adopts a spiritual approach, which takes precedence in most of the areas. The spiritual outlook of leadership has been in use forming a kind of tradition that identifies this form of leadership as significant in overcoming challenges that come along with business speciality, generality, as well as diversity (Jansen, Moosa, Van & Muller 2014).

According to a review of the existing literature, it is hard to find organizations of African origin that are implementing the concept of African Leadership. Nevertheless, several businesses in South Africa have in the recent future have adopted such changes but with the focus on a personal level (Kippenberger 2002). Despite such changes, these businesses are experiencing challenges in capturing the real picture of inspirational leadership especially in the context of behavioral change within the businesses’ framework (Jansen et al., 2014). This report, therefore, adopts the approach of a case study to analyze critically inspirational leadership as applied in South Africa’s First National Bank.

The research focuses on the case study of the First National Bank. The First National Bank, which is commonly abbreviated as FNB, is trying to implement a form of transformation that focuses on a change of its cultural program, as well as the adoption of an inspirational leadership approach. In trying to analyze the form of organizational transformation of this company, the report focuses on research that was conducted concerning inspirational leadership in the First National Bank. The report, as such aims at the evaluation of the emotional intelligence, organizational transformation, and leadership with the primary focus on First National Bank in South Africa.

First National Bank traces its origin from 1934 where it started only in the capacity of a national bank. The initial aims of the bank were to make loans as well as accept any form of deposits from persons and businesses. With time, the bank adopted a community approach with its employees commit themselves to their clients as well as the society where they offered service. Ever since then, the bank has been focused on providing financial service needs to its clients. Nowadays, the operation of the banks, the retails issues are handled by the FNB Metro and the FNB Rural. However, when the merger was initiated between FNB, Momentum, and the Rand Merchant Bank, the results from the operations of the FNB were impeccable.

The appointment of Lucas Wendy of the Retail Bank section of FNB and Peter Van der Walt of the Metro saw the improvement of both FNB Retail and Metro. To achieve the desired results, it was agreed that a restructuring of the FNB was inevitable. The restructuring adopted a cutting of costs as a means of improving the earnings of FNB (Kippenberger 2002). With the improvement of the earnings, the bank focused on growing its revenue. However, to achieve this objective, they focused on improving the customer services of the bank by ensuring that the employees embraced the culture of strong leadership and were result-oriented. As such, the bank invested in its employees as a method of positively influencing their customer service.

According to a study by Boily and Martin (2011), it revealed that it is possible to reach customers significantly through the application of the inspirational form of leadership. The bank, therefore, adopted the VUKA program, which was aimed at changing the strategies within the company; changing the company’s paradigms as well as the perceptions among customers and the entire community.

The VUKA program was used as a standpoint through which the bank would include all employees to discover their experience and its application in building a new culture within the bank. As such, the VUKA program owed its success to the commitment of the top management (Boily & Martin 2011). Even though the company has tried to adopt changes, and despite its success in such attempts, FNB is faced with sustainability issues with much focus on the context of South Africa. Such issues form the most pressing challenges that the First National Bank is facing presently. The research was aimed at adding practical knowledge towards the use as well as implement programs developed by the bank.

This report, therefore, challenges the approach and the theory that was adopted by the bank about the inspirational leadership applied in the company. The adoption of such a transformation approach in the context of the First National Bank has been a challenge to the management since it is hard to get employees who are focused and ready to achieve the objectives of the VUKA program.

Looking at the theoretical foundation used in this bank as well as the research, there is an element of weakness in the foundation. The First National Bank has been known as an example of an organization in South Africa, which has had a great transformation in the recent years (Martin, Morgan and Jacota 2006). It initiated a program that aimed at the creation of a workforce that was community-oriented and adopted new backgrounds. This company was geared at ensuring that its operations are better and that the services they offered were the best in South Africa (Murray 1988).

The initial focus of the company was to balance the management of people with that of content. For this reason, the company adopted an inspirational kind of leadership that consists of African elements (Srivastava 2003). However, the African element in the inspirational leadership was hard to implement in the First National Bank owing to its original structure (Webb 1992). As such, it was hard to effectively implement the concept of the VUKA program in the FNB structure.

Because the inspirational leadership adopted in this company was based on transformational leadership style and emotional intelligence, a critical review of the bank’s leadership reveals that the company lacked a leadership style that takes into consideration the input of all stakeholders (Van der Bank and van der Bank 2014). According to the research presented, the VUKA initiative was aimed at ensuring that both the management and the employees contributed towards a common goal. However, this program encouraged an “up-down” style of leadership.

According to Wanasika (2009), the style of leadership that any organization adopts plays a significant role in determining the possibility of achieving the organization’s goals. Many organizations are concerned with how to build leadership capability that attracts and leverages organizational talent and development of employees.

The current business environment, especially in the context of banks, is marked by rising competition that is driven by globalization and the knowledge economy (Williams 1995). This has necessitated changes in leadership strategies to attain a competitive edge (Wanasika 2009). In the current work environment, leaders have to manage change, solve problems, set the vision and manage production within their place of work (Kafetsios, Kassotaki, Zammuner & Vouzas 2009). Batool (2013) asserts that some of the key competencies that are required for leadership to achieve success in management include leading the self and leading others to allow effective management of teams in an organization.

The VUKA program adopted by FNB insisted on a form of leadership that incorporated the participation of both employees and leaders. However, the management adopted a form of leadership style that approached decisions through the “up-down” style. Such a style has the impact of neglecting the input of the workers at the lower parts of the management structure (Druskat 1994). Due to such a challenge, the FNB required a leadership style whereby the contribution of both managers and employees has a lot of impact on the overall decisions of the organization (Hawkins 2011). This kind of leadership traces its origin back to the traditional forms of leadership.

Considering the traditional view of leadership, it is evident that two types of leadership exist; the transformational and transactional leadership styles (Williams 2012). Transactional leadership involves the relationship between the leaders and the people being led. In this context, the leaders exercise the role of influencing their followers, particularly through the implementation of plans that consider the self-interests of both the leaders and the followers (Jamiu 2005).

Even though the VUKA program was aimed at improving customer service as well as boosting the market share, such objectives were hard to achieve due to a lack of better strategies. Such a scenario can be attributed to the fact that the leaders of the First National Bank in their implementation of the VUKA program applied concepts that were parallel to the goals of the UK. At least, they should have put measures in place to ensure that the program’s goals were consistent with their organizational and management structure and mode of decision-making. Boily and Martin (2011) assert that the mode of approach to decision making plays a significant role in the achievement of any organizational goal.

In the light of the developing global business environment, identify the organizational challenges facing FNB over the next 5 yrs. Drawing upon theoretical concepts covered in the MPO module present and justify your strategic recommendations for the next phase of FNB’s development

Nowadays, the global outlook on business is changing considerably (Lawler 2005). As a result of such changes, many organizations are likely to face organizational challenges while trying to fit into the changing global business environment (Jamiu 2005). Considering the outlined scenario, it is evident that the First National Bank is likely to face many challenges in the future as it tries to boost its market share while improving the quality of the services to their customers (Williams 2012). Drawing upon the theoretical concepts that are in the MPO module, the company will face some of the following challenges over the next five years.

Difference in Priorities

The implementation of any leadership programs is often affected by difference in priorities (Lindebaum & Cartwright 2010). Usually, the implementation of such changes requires the incorporation of several aspects. Such a scenario presents the management with the challenge of incorporating both the management of people and content. For example, the First National Bank is faced with challenges of implementation because the people in management have different priorities in performance, as well as on their vision. As such, the company lacks consistency in its focus and such focus tends to vary with gender as well as the banking industry at large. Also, FNB under based on this context would tend to suffer from variation in the company’s life cycle and the predominant culture within the company. Darity (2008) outlines that there is a need to address both the management of people and content, however, the First National Bank is likely to face a challenge in deciding the focus of its operations.

Following the company’s restructuring and transformation, its weight in the management of the people was stronger as compared to the time of consolidating its management. The gender problem plays a significant role in this context (Nahum-Shani and Somech 2011). It is argued that women tend to be naturally affiliated with particular leadership styles, which makes it hard for the management of FNB to make successful decisions due to issues of different priorities. The best leaders are those who incorporate different styles of leadership in their management to ensure that they offer motivation to the organization’s stakeholders, as well as encourage them towards high performance.

The challenge facing the First National Bank is that they focus on an inspirational form of leadership only. However, since the FNB is in the category of an industry that involves a performance-driven approach, it is hard for it to offer room for discussions that are based on inspirational leadership. Such a scenario does not consider the fact that the discussions might focus on the organizational functionality. Moreover, different patterns are different for different organizations and steps of their lifecycle. These patterns are often influenced by styles such as administrative, results-orientation, integrative and entrepreneurial styles (Sarros & Santora 2001). For the case of the First National Bank, there is the need for creativity, teamwork, incentives that are financially and non-financially based, better structure as well as robust rules.

Challenges Based on Company Setting

The First National Bank is based in South Africa. Several researches have showed that despite the economic atmosphere in South Africa, the country has unique drawbacks to organizations. For example, it is difficult to incorporate international best practices within some of the locally established companies. For this reason, the successful existence of companies such as the FNB is quite hard. Also, South Africa lacks enough skill base since the country adopts a transitional form of economy. Also, just like in other African countries, there are diverse forces that tend to influence businesses in South Africa.

For example, the business philosophy of Anglo-Saxon that challenged many businesses a long time ago is still available nowadays. There is also the problem of establishing a suitable form of remedy to questions about leadership within the borders of South Africa. South Africa’s history is very attractive. For this reason, many people tend to seek markets for their products in South Africa. However, it is important to note that problems are likely to occur whereby the leadership programs incorporate an African Spirit (Wofford, Goodwin & Whittington 1998). Therefore, the First National Bank ought to be realistic to avoid the application of a single style of leadership.

Challenge of Adopting an Inspirational Leadership in an African Context

There is a direct link between the 1990s African Renaissance and the application of an African spirit in organizational management (Woods 2007). Due to the African Renaissance, collectivism and humanism principles are evident in most organizational leadership. The humanism concept incorporates the approach of human beings having the capacity to use their intelligence in ensuring that they lead their lives without overreliance on beliefs based on religions. On the other hand, collectivism refers to the business, land, and industry ownership by state people.

As such, considering the African culture, which emphasizes communal orientation, any organization in this context should ensure that they are focused to help and grow the community. However, the problem that is facing most organizations seeking to operate in Africa is the neglect of the African heritage. As such, many companies, First National Bank included, are facing the challenge of balancing African values with those of colonial origin. For this reason, there is a need for appropriate organizational structures for any organization that seeks to flourish in the African setting.

With the implementation of harmonious cooperation, any organization can gain a concerted effort necessary to achieve its goals (Woods 2007). The First National Bank, therefore, faces the challenge of incorporating its employees’ vision that focuses on the improvement of their customers’ service and the challenge of reality that it faces. Initially, the vision of the company was to enhance structural transformation. However, operating under the inspirational leadership is quite challenging because of the difficulties of implementing the African elements in its leadership styles.

Different Cultures

South Africa consists of people of diverse cultural backgrounds and community orientation. Such diversity has a lot of effects on the management, operation as well as the success of any business. However, in the context of the First National Bank, such a scenario is evident whereby the employees, the management, and the clients have different cultures. For this reason, it becomes hard to implement a number of the company’s policies. This is because; either the employees or the customers may not conform to the policies based on difference in cultures. Therefore, the company can only overcome such diversity in culture if it takes time to educate its stakeholders towards a common culture.

Globalization Challenges

The onset of globalization has had diverse effects on the organizational structure as well as the operation of many businesses. Such challenges can be attributed to the fact that most organizations are still using traditional strategies of operations. Organizations that make use of offline and traditional approaches in their operations are finding it hard to succeed in a globalized business environment. As such, organizations such as the First National Bank are forced to change their approaches to meet the demands of globalization. For example, the implementation of the VUKA program, the “INDABA” and the NHOROWONDO faced such problems due to differences in culture and ideology. The NYOROWONDO, which allows people to take some time to understand the organization and its structure by way of listening to heroic stories, is way behind the current global business environment. The need to match the changing business environment is thus a challenge that the company is likely to struggle to overcome.

Lack of an Emotional Quotient

Leadership entails influencing people and giving guidance to the organization that will lead to increased productivity that is the basis for transformative leadership (Batool 2013). An effective leader should be in a position to respond to work environment challenges and communicate the goals of an organization. As a result, the emotional quotient (EQ) has become a pertinent approach in transformative leadership. Emotional quotient measures emotional intelligence (Batool 2013). According to Kafetsios, Kassotaki, Zammuner, and Vouzas (2009), EQ entails the ability of a leader to understand emotions and apply understanding to enhance collaboration and productivity. Emotional Quotient (EQ) is important in leveraging on personal self-awareness. Thus, emotional intelligence leadership is anchored on four tenets of managing emotions, using emotions, understanding emotions and perceiving emotions.

Lack of Intelligence in the Leaders

Batool (2013) stated that leaders who portray high intelligence play a critical role in driving organizational performance. According to Kafetsios, Kassotaki, Zammuner, and Vouzas (2009) and Batool (2013) emotional quotient leaders can sense the feeling of employees in the work environment and provide appropriate intervention. Organizations oriented to emotional intelligence leadership are more successful.

In a cross-sectional study targeting 100 organizations in banking and manufacturing sectors, Malik, Danish and Munir (2012) examined the correlation between emotional quotient and transformational leadership; it was found that there exists a significant relationship between EQ and transformational leadership. The study included 200 employees and 50 leaders from the 100 organizations. In order to analyze the role of emotional quotient and transformational leadership, questionnaires were used to collect data from leaders and employees.

The questionnaires’ included two sections, demographic and subjective sections. Demographic collected personal information such as age and gender while subjective collected information relating to EQ leadership. The responses obtained from the study were measured using a Five-Point Likert Scale, as advocated by Malik, Danish and Munir (2012). The relationship between EQ and transformational leadership was done by the use of Pearson’s moment correlation. Results from this study showed that EQ is strongly correlated to increased organizational productivity and transformational leadership. As such, the First National Bank did not have leadership styles that were best suited for the achievement of its transformational goals.

In research to investigate the effects of transformational leadership versus transactional leadership, Mohammad (2013) found that transformational leaders were found to have high ratings of satisfaction compared to transactional leaders. Further, the study found that intelligence quotient is imperative in enhancing effectiveness and driving productivity. This is because leaders with high intelligence emotions are likely to employ different approaches to solve issues affecting organizations and have flexible judgments that are valuable to the workforce. Considering that, the First National Bank adopted the VUKA program that advocated for the inclusion of all stakeholders but contradicted with the leadership of the management at the bank, it is hard for the company to achieve its objectives. As such, the bank is likely to face leadership problems for a long time unless the leadership of the company changes.

Conclusion

The research on emotional intelligence, organizational transformation, and leadership in the First National Bank of South Africa critically brought out the picture of what many organizations undergo. From the study, it is evident that leadership and leadership style plays a significant role in achieving an organization’s goals. As such, the leadership style that a company adopts should be able to help the management make the right decisions.

Even though inspirational leadership is a form of leadership favored by many organizations, at times the choice of a business’s location may undermine the performance of inspirational leaders. In this context, a review of the emotional quotient leadership model showed that it plays a crucial role in achieving effectiveness and meeting the goals of an organization. Emotional quotient is based on leadership that is flexible to changing work environment and being sensitive to the feeling of employees. Therefore, it is a key driver in reducing stress, promoting a sense of achievement, by motivating employees. Such efforts are likely to translate to improved performance.

From the foregoing, it suffices that the success of the restructuring g program at the First National Bank lies with the management of the bank. The type of leadership style that they adopt will greatly determine the level of success of the implemented concepts.

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