Introduction to Organizational Development
Question:
Discuss about the Case Study On National Australia Bank.
In order to study the case of any changes made within an organization and measure its success or failure, it is important to understand the concept of organizational development. Organizational development (OD) refers to the study of change and performance in an organization (Froehlich, Segers & Van den Bossche, 2014). In broad terms, OD is the theory of systematic and planned changes within the organization that involves the beliefs, attitudes and values of those working. It is achieved through formation and strengthening of training programs on long-term basis. According to Ghorbanhosseini (2013), organizational development is the process that helps improve an organization’s performance. The author further explains that the process involves three stages on which the changes are made – individual, group and organizational. Therefore, OD helps in improving individual effectiveness, group efficiency and ultimately organizational capability.
The focus of this report is to analyze the case of National Australia Bank (NAB) and its organizational development process. The report will choose one key problem facing the organization and evaluate it. The report will first provide an overview of the bank and then proceed towards over viewing the case. Further, the report will analyze the problems and challenges that confront the organization and try to provide valid recommendations to resolve these. In order to analyze the problems and challenges, a SWOT analysis of the bank will also be performed.
A business bank based in Australia, he National Australia Bank Limited provides banking services to customers within Australia and New Zealand and beyond. Business and Private banking, consumer banking and wealth management, corporate and institutional banking, customer products and services and NZ Banking are the company’s different segments. The company has been in business for more than 150 years and provides banking services to over nine million customers around the globe. It boasts of more than 30, 000 employees serving the customers every day (Nab.com.au, 2018). The company provides services to small, medium and large enterprises as well. The bank has shown improved financial performance throughout the years that is reflected from its financial performances. In 2017, it earned a profit of around 5.3 billion Australian dollars, which demonstrated a remarkable increase from the previous year. However, it also needs to be mentioned that the bank has had few difficulties that is evident from its 2016 annual report where it garnered a mere 352 million Australian dollars as profit (Reuters.com, 2018).
The company is lead by Ken Henry AC as the Chairman who is supported by Andrew Thorburn as the Chief Executive Officer (CEO). The company boasts of a corporate responsibility that focuses on sustainable dissemination of business. It is reflected by the company’s contribution to various community development and environment sustainability projects. It is in fact the first bank that issued a Climate Bonds Standard certified green bond. In addition, NAB has committed 55 billion Australian dollars to environmental financing by the year 2025 (“Environment”, 2018). It is supposed to assist in addressing the climate change issue. Further, the company also boasts of encouraging women empowerment and equal representation with 39% of females representing group subsidiary boards. In 2017, 54% females represented the company’s total workforce. NAB has more than 200 Indigenous Australians as employees, which shows the company’s intentions to encourage each community (“Our people”, 2018). However, the company has faced several problems over the past few years that led to changes in its governing practices. These shall be highlighted in the following sections.
Overview of National Australia Bank Limited
The Chinese-Overseas Banking Corporation (OCBC) bought the private wealth business of NAB that was present in Singapore and Hong Kong in 2017. NAB sold its units comprising mortgages worth 1.7 billion dollars and deposits worth more than 3 billion dollars. The acquisition by the OCBC Bank of NAB’s private wealth meant that NAB would no longer provide private wealth services to its 11,000 customers in Singapore and Hong Kong (Theaustralian.com.au, 2018). According to the bank officials, the sale was done in order to focus on the institutional customers, business and corporate sectors in Asia.
The acquisition meant that the customers had to transfer all their assets from NAB to OCBC. In order to make the transition process smooth for the customers, NAB provided training to its staff in Asia so that they could support the customers. The decision was made with a view to bolster the bank’s returns and lower reputational damage risk by loading off the wealth operations. Analysts opined that the move by the bank came at a time when it was battling to manage its operations within and outside Australia. Further, the numerous controversies that dented the company’s image also needed to be addressed. In addition, it also wanted to focus on its main strengths that are the retail and commercial banking.
The decision to sell private wealth assets although initially thought to be risky proved beneficial for the bank, as it was able to garner good profits during the financial year 2017. However, the initial figures in 2018 indicate a fall in its shares as the current price has come down by 0.45% in April (Quotes.wsj.com, 2018).
NAB also faced a serious allegation that the bank’s financial planners gave wrong advice to the customers thus resulting in the loss of 15 million Australian dollars. The bank had to return this amount to the 750 customers who were given bad advice by the bank’s financial planners. The CEO Andrew Thorburn accepted the mistake and assured strict and immediate action in this regard. However, he also stated that the bank is not proud of this issue and that it reflected badly on the bank in losing customer’s trust (Abc.net.au, 2018). The bank came under heavy scrutiny by the leading banking and financial regulation bodies in Australia including APRA and ASIC. The Royal Commission on Banking also summoned the top officials of the bank. These facts reveal that the new strategies implemented by the bank are not proving to be effective as thought by the strategists (Afr.com, 2018).
As part of its innovative strategy, NAB looks to appoint new technology specialists who are adept in handling digital issues. Around 600 specialists will be hired as part of the strategy in order to strengthen the company’s online presence (“600 technology specialists to join NAB | NAB News”, 2018). These specialists will look after the areas core to the banking corporation that includes DevOps that is development operations, engineering, security, architecture, UX and data (News.nab.com.au, 2018). However, it is important to state that the company is facing issues in employee retention and to implement such a crucial change, it has to proceed carefully. In this way, the bank aims to make its services reach the customers in a simpler and faster way. In addition, CEO Andrew Thorburn announced that the bank aims to invest 1.5 billion dollars in the coming three years to cope up with the changing needs of the market and the customers as well (Jain, Keneley & Thomson, 2015).
Analysis of Problems and Challenges
In order to understand the problems and challenges the bank faces, it is important ro know its strengths and weaknesses and the many opportunities and threats. A SWOT analysis could give a clear picture.
Strengths – National Australia Bank has, as its biggest strength, a strong brand name. Apart from that, it is also positioned strongly in the financial sector. Further, the company holds good revenue record and interest income. In addition, its financial services performance is good in regards to the personal and business services. NAB is also Australia’s biggest business bank in terms of assets. It also has a strong business banking profile in the UK providing diverse products and services. Its Go To Market strategy is one of the best in the business that attracts millions of customers towards buying its products. The bank also has a good record of accomplishment when it comes to mergers and acquisitions. Over the years, it has been successful in acquiring several companies in different parts of the world thus building a strong and reliable supply chain.
Weaknesses – The major weakness confronting the bank is its waning revenue that has affected its development. In addition, the bank is yet to make a strong ground globally. Apart from that, the frequent outages in its online system owing to the technical issues have proved utterly frustrating for the customers causing them great inconvenience (Smh.com.au, 2018). Further, NAB has also faced issues relating to its practices in operational risk management. The bank has had limited success outside its traditional strengths that is retail and commercial banking. One of the core reasons for this is its present culture that looks to focus only on traditional strengths rather than thinking on new ways to earn profit. Furthermore, the bank has poor training and development program that has resulted in higher rate of attrition compared to its rivals.
Opportunities – Amongst its many opportunities, NAB has the chance to collaborate with Visa to roll in the area of payments innovation. It would help the company roll out innovative solutions and products and increase its customer base. Further, the emergence of online channels has presented the company with sea of opportunities. Australians are amongst the top users of smart phones and this allows the bank to expand its business through the online channels (Statista.com, 2018). The lower rate of inflation is likely to bring stability in the Australian market thus enabling banks to give lower interest rates to the customers.
Threats – The emergence of new technologies could prove a threat to the bank as competitors look to consolidate the new technologies. The competitors have further planned to focus deeply on expansion into other countries thus widening their portfolios. This could come as a big threat to NAB as it also plans expansion. The new policies and regulations in the United States and the Brexit in UK might also prove as a threat.
A close analysis of the weaknesses and threats faced by NAB reveals the various problems it is going through and the challenges it confronts. The bank as its major problem faces the regular outages in its online platform. It has resulted in growing customer dissatisfaction. The customers even took to twitter to express their dissatisfaction and frustration. Although, the concerned officials of NAB responded to the complaints within moments, it did not diffuse the frustration of the customers. The bank has to find ways to resolve this issue at the earliest else, it might lag behind other banks. Further, the bank lacks innovation in areas outside the traditional banking realm thus allowing others to go ahead in the race (Klettner, Clarke & Boersma, 2014). It has displayed poor performance in the private wealth investment segments, which can be evident by its sale of the private wealth to OCBC Bank in Singapore and Hong Kong. The poor handling of financial planning has also affected the bank negatively as it has both hampered the reputation and incurred huge financial loss as well. The bank failed to take strict action against those who were responsible for providing bad financial advice to the customers. The bank further faces the problem of increased rate of attrition compared to other banks in the business and hence it has to invest more on employee training and development.
SWOT Analysis of National Australia Bank Limited
Amongst its many challenges, the biggest of them all is providing top-level online services to customers that outperform rivals in the market. Following its problems with providing online services, the bank has provided its rivals with the opportunity go ahead by promoting their advanced online services.
Moreover, the constantly changing rules and regulations in the overseas market pose great challenge to the bank, as it has to make changes within its own policies. This requires the bank to be flexible enough to update its policies and functioning as per the situation demands.
The bank has a strong reputation in the retail and commercial banking sector but lags behind other important sectors. It is another challenge the bank faces as its competitors are leveraging on this opportunity and going ahead of it in this race. The 2016 selling of private wealth to OCBC Bank in Singapore and Hong Kong, as already mentioned, proves this.
After a broad analysis of the company in question, several recommendations could be given for the company to tackle the challenges and reduce the problems.
It is recommended that the bank install advanced technology within its online system so that the outage problem is resolved.
Further, it is also recommended that it take strict steps in addressing the issues like poor financial planning by recruiting competent professionals.
It is also recommended that the company employ develop training and development programs in order to recruit and retain employees and reduce the high attrition rates.
The bank can further strengthen its workforce in segments other than retail, business and corporate and expand its business in order to achieve and maintain the edge.
Conclusion
It can be stated in conclusion that the National Australia Bank must upgrade its online systems and improve its recruitment and retention policies in order to stay ahead of its rivals. The banking industry in Australia has faced the wrath of the public in recent years due to their negligence and non-compliance with the regulatory policies in the country. The report presented an overall analysis of the problems and challenges faced by the bank and the strategies it applied to overcome those. The report also evaluated the strategies and found that the bank must not rely only on its traditional strengths rather focus on strengthening other segments. The report also did a SWOT analysis of NAB and revealed its strengths and weaknesses along with the opportunities and challenges. Through the SWOT analysis, the core areas where the bank needed to focus and work on was found.
References:
600 technology specialists to join NAB | NAB News. (2018). News.nab.com.au. Retrieved 12 April 2018, from https://news.nab.com.au/600-technology-specialists-to-join-nab/
Abc.net.au. (2018). Bad financial advice costs NAB millions in compensation. ABC News. Retrieved 12 April 2018, from https://www.abc.net.au/news/2015-02-21/nab-pays-millions-in-compensation-over-bad-financial-advice/6172650
Afr.com. (2018). National Australia Bank restructures private bank; ANZ locks down wealth sale. Financial Review. Retrieved 12 April 2018, from https://www.afr.com/street-talk/national-australia-bank-restructures-private-bank-anz-locks-down-wealth-sale-20170315-guycs5
Environment. (2018). Nab.com.au. Retrieved 12 April 2018, from https://www.nab.com.au/about-us/corporate-responsibility/environment
Froehlich, D., Segers, M., & Van den Bossche, P. (2014). Informal workplace learning in Austrian banks: The influence of learning approach, leadership style, and organizational learning culture on managers’ learning outcomes. Human Resource Development Quarterly, 25(1), 29-57.
Ghorbanhosseini, M. (2013). The effect of organizational culture, teamwork and organizational development on organizational commitment: The mediating role of human capital. Tehni?ki vjesnik, 20(6), 1019-1025.
Jain, A., Keneley, M., & Thomson, D. (2015). Voluntary CSR disclosure works! Evidence from Asia-Pacific banks. Social Responsibility Journal, 11(1), 2-18.
Klettner, A., Clarke, T., & Boersma, M. (2014). The governance of corporate sustainability: Empirical insights into the development, leadership and implementation of responsible business strategy. Journal of Business Ethics, 122(1), 145-165.
Nab.com.au. (2018). About us. Nab.com.au. Retrieved 12 April 2018, from https://www.nab.com.au/about-us
News.nab.com.au. (2018). How NAB is changing to support customers in the digital age | NAB News. News.nab.com.au. Retrieved 12 April 2018, from https://news.nab.com.au/news_room_posts/supporting-customers-in-the-digital-age/
Our people. (2018). Nab.com.au. Retrieved 12 April 2018, from https://www.nab.com.au/about-us/corporate-responsibility/our-people
Quotes.wsj.com. (2018). NAB.AU Financial Statements – National Australia Bank Ltd. – Wall Street Journal. Quotes.wsj.com. Retrieved 12 April 2018, from https://quotes.wsj.com/AU/NAB/financials
Reuters.com. (2018). ${Instrument_CompanyName} ${Instrument_Ric} Key Developments | Reuters.com. U.S.. Retrieved 12 April 2018, from https://www.reuters.com/finance/stocks/NAB.AX/key-developments/article/3719947
Senior NAB executives spared axe over financial advice scandal. (2018). ABC News. Retrieved 12 April 2018, from https://www.abc.net.au/news/2016-10-06/nab-apologises-for-dodgy-financial-advisors-during-bank-inquiry/7907840
Smh.com.au. (2018). National Australia Bank hit by yet another online banking outage. The Sydney Morning Herald. Retrieved 12 April 2018, from https://www.smh.com.au/business/banking-and-finance/national-australia-bank-hit-by-yet-another-online-banking-outage-20171011-gyyub0.html
Statista.com. (2018). Smartphone users in Australia 2015-2022 | Statistic. Statista. Retrieved 12 April 2018, from https://www.statista.com/statistics/467753/forecast-of-smartphone-users-in-australia/
Theaustralian.com.au. (2018). NAB offloads private wealth business in Singapore and Hong Kong. Theaustralian.com.au. Retrieved 12 April 2018, from https://www.theaustralian.com.au/business/financial-services/nab-offloads-private-wealth-business-in-singapore-and-hong-kong-to-ocbc/news-story/ea130c8ba189e867bfea95c06f216dd3
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