Nigeria Bank Case
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Executive Summary
This case shows us the importance of companyЎЇs core principles and makes us think how to keep the values of the principles and renew the organization. Guaranty Trust Bank has three main principles when it is founded. Those three principles are ÐŽoIntegrity,ÐŽ± ÐŽoProfessionalismÐŽ± and ÐŽoHonesty.ÐŽ± Even though the environment was not good for the banks in Nigeria, GTB had been successful. Because it has a strong culture which represents three principles as above. And strategies the company applied to the society in order to fit with national culture worked effectively. For example, it funded at initial investment differently from what the common Nigerian banks did and grew rapidly. It became one of two commercial banks to receive a good rating in the survey. The bank is a really local success story. As the organization grew bigger, GTB had challenges on companyЎЇs principles. A lot of employees including managers didnЎЇt pay the tax to the government properly. That could give harmful damage to the company. I argued some solutions about how to handle challenges Adeola faced. I suggested that GTB set up its principle sharing system, consolidate middle management, modify recruit system and reconstruct the organizations.
I can clearly say that ÐŽoIntegrity,ÐŽ± ÐŽoProfessionalismÐŽ± and ÐŽoHonestyÐŽ± are the main principles the GBT founded on. When I look at the reasons why Fola Adeola and Tayo Adeola left Continental Merchant Bank, the reasons represented Fola and AdelaЎЇs basic idea about what the bank should be. At that time, Adela and Tayo thought Continental Merchant BankЎЇs owners saw banking as a peripheral extension of their own business interests with neither the integrity nor professionalism that Adeola and Tayo sought.
When they started Guaranty Trust Bank PLC Nigeria, they need to raise quite a lot of money amount to 2.5million dollars. What the common way for banks in Nigeria to gather fund at the initial stage is to go to one or two politically powerful investors. And the banks rely on political favoritism, privileged position and varied degrees of corruption to help the banks themselves survive. But, Adeola and Tayo did differently. At first, they drew up a list of 150 prominent Nigerians whom they considered as possible backers. After that, they filtered a few powerful investors and collected only smaller investments of between 100,000 and one million Naira dollars. They evaluated the future investor candidates again and the original list was reduced to 43 in number. Their criterion to judge the people is ÐŽoIntegrity.ÐŽ± This procedure is really uncommon in Nigeria. But, Adeola and Tayo kept the principle.
Adeola and Tayo came to the investors as professionals, and it made them feel that the real bankers were coming to them to invest in a bank. Every month, GTB sent out news letters to all of 42 people to inform what was happening and where the bank was and where the bank is going for the future. Symmetries information as above between investors and agents is one of the key factors to represent ÐŽoProfessionalismÐŽ± of the GBT bank. And, when the bank got a banking license, Adeola and Tayo only took the initial risks. It is a good example of the professionalism.
Honesty should be added for the GTBЎЇs principles. From AdeolaЎЇs experience at Continental, he had come to regard bribery as a ÐŽocancer.ÐŽ± According to his saying, ÐŽoLike telling lies, once you start you cannot stop, and you have to tell even more lies.ÐŽ± he emphasized honesty in order to keep trust among employees.
Then, where did the three most important principles such as Integrity, Professionalism and Honesty come from? Even though, mostly, the principles reflected AdelaЎЇs prior banking experiences, there are some other factors. The values he had grown up with as a child in Lagos can be. From his parents and brothers, he recalled he learned the principle of communal sharing and a fierce sense of honesty. And his scout experience which made him make learned the teamwork.
GTB setup some strategies for organizational culture to fit with the national culture. Right after they started the bank business, they trained their employees. The education programs contained not only the professional topics meaning technicalities of accounting and basic operations in commercial banking but also vision and dream thing Adeola wanted introduced. Through the educations, employees at the initial stage spent considerable time reviewing companyЎЇs vision and dream. And the vision and dream were something that they could never take out of their lives.
GTB also charged up their employees by having a new building and redefining the concept of a customer-banker interface. And there were equality strategy. All of whom were college graduates were initially assigned as tellers even though they donЎЇt like it. Everyone ate in the same place. Moreover top managers have no separate dining rooms and parking spaces.
Honesty worked for fitting the culture into the society. The company published its losses to public under boardЎЇs approval. Actually, the company didnЎЇt need to announce the unhappy news. Because management could bury the loss in the following yearЎЇs profit. The result was great. Nothing happened to them. This episode strengthened companyЎЇs confidence that doing right thing does not mean that youЎЇll get punished.
Those strategies such as principle education, equality and honesty really worked in the context of Nigeria. That represented, even in the third world like Nigeria, the companyЎЇs core principles so called ÐŽoIntegrity,ÐŽ± ÐŽoProfessionalismÐŽ± and ÐŽoHonestyÐŽ± fitted. If the results were different from what they expected, no one knows what would happen to the company.
Even though company had become successful as a role model of the society, since its founding in 1990, the company faced some challenges. Environmentally, the economy of Nigeria is still not good. Weak productivity, low industrial capacity utilization and double digit inflation can explain the weakness of the nation. And its political situation is not stable. It means the government easily changes regularities which might affect the companies a lot.
However, in terms of GTBЎЇs perspective, the most serious challenge Adeola faces is about companyЎЇs core principles. Specifically speaking, he has employees who donЎЇt deeply follow GTBЎЇs principles such as ÐŽoIntegrityÐŽ± and ÐŽoHonest.ÐŽ± Some senior managers resisted AdeolaЎЇs strong stance against bribery. Adeola is one