BASED ON THE NEDBANK CASE STUDY
APPENDIX B: EXAMINATION CASE STUDY OCTOBER/NOVEMBER 2018
Nedbank: The strategic leadership of Tom Boardman, 2004 to 2009
Nedbank’s history traces back to the early 19th century with the
establishment of the Cape of Good Hope Bank in 1831. Following successive
...
,BASED ON THE NEDBANK CASE STUDY
APPENDIX B: EXAMINATION CASE STUDY OCTOBER/NOVEMBER 2018
Nedbank: The strategic leadership of Tom Boardman, 2004 to 2009
Nedbank’s history traces back to the early 19th century with the
establishment of the Cape of Good Hope Bank in 1831. Following successive
branding and structural changes, from The Nederlandsche Bank voor Zuid-
Africa to the Netherlands Bank of South Africa, to Nedcor Group in the 1980s,
the Nedbank Group was formed in 2003. Today the bank has strategic
alliances across the globe, they are proud of their reputation as one of the
most transformed banks in South Africa.
The history of the bank has various highlights. For example, in 1964, it
became the first bank to introduce computerised banking services and in
1983, it became the first bank in South Africa to pay interest on current
accounts. In addition, the bank underwent various mergers, acquisitions,
name changes, listings and delistings on the stock exchange, and launched
various corporate social responsibility initiatives such as the World Wide
Fund for Nature, which launched the Green Trust.
Nedbank regards 2004 as a watershed year for the group as both structural
and strategic changes were implemented to restore its performance and lay
the foundation for sustainable growth into the future. In this year, Nedbank
was faced with considerable challenges and a highly uncertain future. In the
2
,previous year, the Nedcor Group was formed, combining Nedcor, BoE,
Nedcor Investment Bank and Cape of Good Hope Bank. In 2004, the bank was
losing market share, headline earnings1 were down 98 per cent with a return
on equity2 of only 0,4 per cent. Nedbank was considered the poorest
performer of the top banks in South Africa, who were all on an upwards
trajectory compared to Nedbank’s decline. Nedbank’s reputation was at an
all-time low. During this time, Tom Boardman was appointed as CEO and has
been tasked with the rebuilding of Nedbank. On the day of the
announcement of his appointment, the Bank’s stock prices drop by 6 per
cent. However, the new CEO had a plan which entailed a complete overhaul
of the way the company did business, including corporate culture and
leadership. Mr Boardman formulated the following goals:
1 Headline earnings are a measurement of Nedbank’s earnings based
solely on operational and capital investment activities. Headline
earnings specifically exclude any income related to staff reductions,
the sale of assets or accounting write-downs.
2 Return on equity (ROE) measures Nedbank’s profitability. It calculates
how many Rands the bank generates with each Rand of
Regain market share in key retail product areas and penetrate the
mass market
Retain leading positions in key wholesale market segments and
grow the business banking franchise
Reposition and stretch the Nedbank brand for broader market
appeal
Become a bank for all South Africans
Become the best place to work for in the financial services sector
The core business strategy of the bank informed a redefinition of its brand
and the supporting marketing initiatives, anchored in the restated vision
“[t]o become Southern Africa’s most highly rated and respected bank ….. by
our staff, clients, shareholders, regulators and communities. However, in
order to be successful, Tom Boardman and Nedbank understood that, in
order to realise the vision, the bank needed to change, undergo a learning
process. In addition, they also realised that this new vision needed to be
supported by a strong strategy and a uniting set of values. “In order to create
a ‘High Performing Culture’ it was critical these values were adopted,
accepted and lived by all employees, and be seen to exist with top
leadership”. The emergence of a vision-led, values-driven organisation was
encapsulated in what is referred to at Nedbank as the "Dagwood" - an
3
, overall one-page strategic summary of the issues important to the rebuilding
of Nedbank.
Tom Boardman launched Strategy, Values and Brand workshops with senior
leadership to establish the direction and core values of the organisation. Four
of the core values were established during this process, and were aligned
with their parent company’s values. These four values were accountability,
respect, integrity and pushing beyond boundaries. For the final value,
Nedbank’s employees were encouraged to offer their input. The value
cohesively chosen was “people-centred” which reflected Nedbank’s efforts to
become more client driven and employee focused. The “Journey Back to the
Top” was a three-year planning process, which sought to address the
immediate issues facing Nedbank, while establishing measures to track the
effectiveness of their initiatives. Priorities included breaking down silos
within the organisation through restructuring departments and the executive
team, fostering transparency by promoting two-way communication
between leadership and staff, and developing a fair and equitable
environment, which went beyond the laws required in
South Africa.
Using regular Cultural Values Assessments, Nedbank is able to gauge the
effectiveness of their various initiatives. They use the assessment, in
conjunction with an additional employee satisfaction survey, to listen to their
employees. This helps to point the organisation in the right direction and
understand what shifts in priorities might be needed to improve
performance.
The outcomes of Nedbank’s turnaround strategy were remarkable. Since
2005, Nedbank have measured their culture every year. They include the
result from their annual Cultural Values
Assessment as part of their corporate scorecard. The regular assessments of
their culture have allowed Nedbank to measure and monitor the evolution of
their organisation. Each year since the survey has been offered to employees,
the participation rate has increased – from 20% in the first year to 69% in
2010. The entropy score has fallen from 25% in 2005 to 13% in 2009, where it
remained in 2010 despite the continued uncertainty in the financial market
place. The value matches from the Current to Desired Culture has risen from
three to six. The Nedbank Staff Survey shows an overall improvement of 26%
during this time. In 2010, Nedbank achieved an additional milestone when
4
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