Ingrid Johnson and Nedbank: Navigating Change in Business Banking

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INGRID JOHNSON AND NEDBANK
BUSINESS BANKING
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Table of Contents
INTRODUCTION...........................................................................................................................3
1. IDENTIFY AND ANALYSE KEY ISSUES FACING INGRID JOHNSON WHEN
LEADING THE CHANGE INITIATIVES AT NEDBANK BUSINESS BANKING..................4
2. CRITICALLY ASSESS THE EFFECTIVENESS OF THE CHANGES IMPLEMENTED
INCLUDING BOTH THE STRENGTHS AND WEAKNESSES OF THE INITIATIVES
TAKEN............................................................................................................................................9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
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INTRODUCTION
In this case report, the emphasis will be laid on the issues regarding the change that is to be
executed at the Nedbank’s business banking (BB) division, a bank in South Africa, during the
year 2005-2009. The change is to be implemented during the leadership of Ingrid Johnson, the
Chartered Accountant. In the year 2002, the bank of South Africa merged with Nedbank. The
market value of Nedbank was tumbled and also the senior leader of the bank was to be ejected
because of the predicaments in procurement financing and other reckless gambles and bets in the
economy.
At the Nedbank, BB division had more than 2000 staff employed and was the largest division of
Nedbank. In 2005 when Johnson Ingrid joined the bank although being the most profitable
division, it was required to restructure the banking operations and develop the excelling division.
It was obliged by Johnson to revamp the culture of the division, formal and recognized
organization, critical responsibilities, and individuals working at the BB division. In this case,
the efforts made by Johnson, the strategies for change implementation are being discussed.
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1. IDENTIFY AND ANALYSE KEY ISSUES FACING INGRID JOHNSON
WHEN LEADING THE CHANGE INITIATIVES AT NEDBANK BUSINESS
BANKING
In this segment, the key issues faced by Ingrid Johnson, the Group Managing Executive of BB
division at Nedbank during implementing the change and restructuring the division is being
identified and scrutinised.
IMPORTANCE OF LEADING CHANGE
According to Kelvin MacDonald, Change is the endless process in the world of business.
Whether it is the banking business or any other, the people who are leaders of the business
should adopt the policy of changing or restructuring the business operations for the effective
management of the business (MacDonald, K., 2019).
Thus the importance of change management has been understood by Johnson and she found that
though the business banking at Nedbank has achieved enormous success due to increase in the
competitors in the sector of business banking, it is required to restructure the internal
management of the bank so that the goals of the business are achieved in an effective manner
(Rutherford, 2019).
With the help of the power and politics, the issues, needs and effects related to change in the BB
are identified:
The main source of implementing the change was that the black economic empowerment was
signed. The barriers towards the change implementation were there were only three positions
available for the senior management for black people. The key driver towards the change was the
Nedbank was under pressure to become the public company (Nicolson, 2015).
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For leading the change in the Business Banking at Nedbank, Johnson followed the Kotter Model
and focused on achieving the stages and executing the same in the business to improve the
business operations under her leadership which is understood through the following diagram:
Figure 1 Kotter Model for Leading to Change
(Source: Small et al., 2016)
KEY ISSUES FACED BY INGRID JOHNSON AT NEDBANK BUSINESS BANKING
DIVISION DURING LEADING THE CHANGE
During monitoring the changes in the internal organization at BB Division at Nedbank, Johnson
had faced many critical issues which led her in the dilemma. Behind the success or failure of the
business, the people of the organization are held responsible. The bureaucracy at Nedbank’s
Business Banking was multifaceted (O’Reilly III and Tushman, 2016). The accountability was
found very poor and slow. It was found that the organizational culture of the BB reflects the
shame and blame. The culture of achieving high performance was required. Thus the managing
director of the BB division, Ingrid Johnson, formulated some strategies and also restructured the
organization with the support of Dempster, the managing director of Corporate Cluster at
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Nedbank and formulated the strategic plan for improving the business operations (Scheepers et
al., 2019).
Issues related to the Divisional Business Banking at Nedbank: In the year 2008, when
Johnson was observing the banking circumstances, it was analysed that at Nedbank, Business
Banking contributes around 40% in the aggregate profit. It was because of the increase in the
equity return at division ranging from 15% to 30%. This was found to be the remarkable success
for the BB sector at Nedbank. But on the other side, the economy of South Africa was not up to
the mark and suffering from losses. The major two issues that were identified by Johnson were
that firstly BB was lacking in acquiring the new clients and it was mandated in the division that
the staff performs effectively and meet the difficult challenges (Smidt et al., 2016).
Key Issues Identified In Restructuring The Organizational Structure: At the Business
Banking Division of Nedbank to collaborate with the team members and the staff members was
becoming the challenging question for the managing director, Johnson, a majority of the
managers were not ready to coordinate with the strategies implemented for the restructuring the
division. So to overcome this situation, Johnson replaced some of the stubborn managers and
hired or re-positioned the managers to a different position.
Resistance to change: It was observed by Johnson that the new team of ExCo were not enough
compatible and never benchmarked their targets neither were ready to meet the urgency. The
ineffectiveness among the internal management of the business made the staff to attain the lower
targets. The duplicity of the members was also the issue as they never stick towards attaining the
goals (Georgalis et al., 2015).
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Apart from all this, the issues related to the resistance to change were identified with the help of
different sources of resistance such as Kotter and Schlesinger model of resistance (Ybema et al.,
2016).
The following four most serious issues at the BB division at Nedbank that made the people resist
changing identified by Johnson are:
 Parochial Self-Interest: The staffs at Business Banking Division at Nedbank were more
concerned about their self-interest which could be affected due to the changes
implemented by Johnson (Ybema et al., 2016).
 Different Assessments: As the managing director of the BB was Ingrid Johnson, the
female leader, many of the staff members were not ready to accept the decisions that
were laid by her on the staff as they found themselves more superior than the newly
appointed managing director. This made much difficult for Johnson to evaluate the past
performance of the management.
 Misunderstanding and Lack of Trust: The managers of the Nedbank’s BB were not
accepting the decisions of Johnson as they believe that they have more experience and are
working better towards the business goals.
 Low Tolerance for Change: Johnson while initiating the changes restricted the
organizational structure of the business and this made the managers switch their
positions. Some of them were promoted while some were demoted and this made them
resist changing (Ybema et al., 2016).
Johnson confronted her team to work effectively during the urgencies and meet the defined
targets. For this, she launched the metrics system named "clock is ticking" at the workplace that
will track the performance of all the staff and business managers, sales managers, at the monthly
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basis and this tracking can be viewed by anyone and everyone in the business. With this system,
it was found that the morale of the staff is low. The staffs were not satisfied with the leadership
of Johnson as they found it too challenging. This led Johnson in the situation where it became
difficult to change the culture of BB to the high performing culture (Scheepers et al., 2019).
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2. CRITICALLY ASSESS THE EFFECTIVENESS OF THE CHANGES
IMPLEMENTED INCLUDING BOTH THE STRENGTHS AND
WEAKNESSES OF THE INITIATIVES TAKEN
This segment deals with assessing the effectiveness of the changes that are initiated by Johnson
at BB. The steps that are taken by Ingrid Johnson for improving the business scenario of the
Nedbank’s business banking has rehabilitated the organizational structure through the
ineffectiveness of business banking can be condensed (Hayes, 2018).
Effectiveness of the changes implemented can be explained by identifying the strengths and
weaknesses due to the change implication at the business:
Strengths of the Changes Initiated In the BB at Nedbank:
 Johnson with the support of Dempster, developed a strategy for the improvement of the
business in the year 2005 in which the overall renovation of the organization was
included such as the structural change, process of the business operations, performance
culture, etc. this made a positive effect on the increase in the black representation by 40%
in the senior management (Ovadje et al., 2018).
 The organizational structure was changed and includes the accountable managers such as
four divisional executives who will monitor the regional business heads of Nedbank,
front-line client service teams that would deal in financing the acquisition. Through this
edge, the roles and responsibilities of one thousand staff will be reformed. The Area Sales
Managers are responsible for directing the client service teams and forward the report to
the regional business heads.
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 In the year 2006, the effective outcomes were obtained from Johnson's team and created
the acronym named ASCENT which defines the strategy of the BB that every staff have
to follow. Acquire the clients, Salesforce output and size, cross-selling, easy process, new
products and services, talented, thrilled and expert individuals (Ovadje et al., 2018).
 As compared to 2005, until the end of 2007, there was a measurable change in the growth
of business banking. This was hugely contributed by the racial mix factor. Thus the
culture of the business banking changed from low performing culture to high performed
culture (Saayman, 2016).
Weakness of the Changes Initiated in the BB at Nedbank:
 Though the black economic empowerment was signed, there were only three positions
available for senior management for black people.
 In the year 2006, during the first quarter, it was disclosed that BB was still lacking in
acquiring the new clients and the generation of revenue was not up to the expectations.
 The misstep was taken by Johnson during the repositioning the managers which left the
managers unsatisfied because though their positions were changed, the responsibilities
were same (Ovadje et al., 2018).
 The pause and reflect towards the change-workshops has not effectively proved a success
at BB at the time of recession In South Africa (Saayman, 2016).
 There was a lack of collaboration among the divisional executives due to the
misunderstanding for the shared Service Business Plan.
 Johnson announced to hold the meeting at every Friday which would turn out to be
expensive.
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 Though Johnson laid too much effort in encouraging the staff it was unmanageable to
change the individual's habit and culture (Saayman, 2016).
In the Jupiter Report of McKinsey, there were four gaps identified related to the performance.
There was also the strategy recommended by him which is, however, to be implemented by
Johnson for managing the organizational scale of the business banking. Thus with the above-
identified strengths and weaknesses, Johnson would be able to develop the strategies to
overcome the weakness (Hayes, 2018).
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CONCLUSION
In the given report, the case of the Ingrid Johnso9n and Nedbank Business Banking has been
analysed which has reflected the steps taken by Johnson, the managing executive of BB and how
she overcame the difficulties that were faced during implementing such changes in the business.
There are also some strength and weaknesses being identified due to the change initiatives taken
by Johnson in the internal organization. Thus, at last, coping with the unfavourable situations at
the business, Johnson successfully made business banking division of Nedbank the profitable
business and developed the high performing culture in the business.
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