NEDBANK: Transformational

Leadership in Sustainable
Turnaround
CASE ANALYSIS

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Introduction
This document is a case analysis of the case “NEDBANK: Transformational Leadership in
Sustainable Turnaround”. The case comprises of the two main characters Boardman and Brown
in successive leadership roles and has a turnaround story of Nedbank. Considering this aspect
Leadership attributes of both of the main characters is studied. Subsequently the change
management process followed in the bank is studied using various frameworks.

Case Summary
History of Nedbank:
In 1888, The Nederlandsche Bank en Credietvereeniging voor Zuid-Africa (NBCV) was
founded and was consequently established as a South African banking company in 1951 and
then changed its name to Nederlandsche Bank en Credietvereeniging voor South Africa
(NBSA). Nedbank was a pioneer of South African banking sector. For example: it was first
bank to introduce computerized banking services (1964) and also the first to pay interest on
current accounts (1983). It invested heavily in IT company Dimension Data and its Technology
and Operations Division was largest within group.
Nedcor grew both organically and through mergers and acquisitions. Late 1990s Nedbank
Private Limited and Syfrets Private Bank merger making Nedcor largest private bank in South
Africa. In 1995, Necor’s Permanent Bank divided in Permanent Bank and People’s Bank. It
also launched a unsuccessful bid to acquire Standard Bank in 1999. Other mergers and
acquisitions were 2001 merger with Old Bank and acquisition of BoE bank in 2002.

Strategic, structural and cultural issues

Due to heavy investment in technology, the bank’s branches typically had two branch managers
one for Technology and Operations and other for Sales and Marketing which led to confusion,
lack of coordination, complexity and difficulty to assign responsibilities and negligence toward
clients. Nedcor responded to the volatility of the rand by adopting interest rate hedging which
lead to great losses. To conceal these losses, the company resorted to aggressive accounting
and created a false impression of good financial condition. As certain customer segments were
not profitable the management focused only on limited customers who were perceived to be
profitable. This lead to formation of People’s Bank division

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They followed a complicated matrix structure. There was a lack of accountability and the
tendency to find faults in others. The focus was on short term profitability. Authoritative
leadership of bank managers was under pressure. Prevalence of low morale and procrastinating
attitude , and low risk-taking culture impediment in innovation.
Nedbank under Boardman:
In 2003, 12.8% of the workforce retrenched and the market cap of Nedbank dropped drastically
in 2004 putting Nedbank in a precarious position of losing its license. Due to Nedbank’s heavy
investment in technology, the bank’s branches had two managers, one for Technology and one
for operations causing confusion and hampered coordination. It had a complicated matrix
structure and less accountability. It was amidst these challenges that Boardman was given the
opportunity to turnaround Nedbank.
Boardman was appointed as the CEO of Nedcor in 2003. The group was made up of Nedcor,
BOE, Nedcor Investment bank and Cape of Good Hope Bank. Market sentiment on Boardmans
suitability for the job was bad and share prices dropped
Strategies Boardman undertook:
He changed the name from Nedcor limited to Nedbank Group limited a year after he took over
his position. Focussed on three major areas, vision, culture and measurement. He focussed on
the nexus between five major stakeholders, staffs, clients, regulators and communities. He
emphasised that an inspired and energised staff would deliver superior performance to
customers and that would affect how the shareholders, regulators and communities viewed the
bank. He made sure that the new culture of the organization ensured that the values were
adopted. He invested in personal mastery and leadership development of employees more than
any organization in South Africa. He viewed environmental sustainability as integrated with
economic sustainability. He drafted policies that were in favour of environmental
sustainability.
Achievements under Broadman
There was a significant improvement in the culture of the organization. The Barrett survey
indicated that five current values out of the ten required values matched. Nedbank changed
focus from being a niche bank to a bank for all. The outreach of the bank increased
significantly. It became the first bank to achieve carbon neutrality in 2010.It was awarded the
Sustainability Leadership award
In 2013, Nedbank became one of the four largest banks in South Africa by assets, with six
million customers 11.3% market cap.
Nedbank under Brown

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Mike Brown became the CEO in 2010 after the retirement of Broadman. Brown credited Brown
for his initiatives and was determined to take them further. Initiatives undertaken by Brown
included starting a blog to directly communicate with staff known as “Talk to Mike”, launching
“My financial life” an app to collect information on financial data and “pocketPOS” to allow
customers like artisans to make payments anywhere
Thus, by his referent power, more executives came up with new innovative ideas. Thereby,
Nedbank along with technology focused on long term sustainability for example building a
secure digital highway.
Future Challenges for Nedbank
1. Lag in African expansion as compared to competitors
Initiatives taken in this direction included, partnership model which includes making
alliances and sharing clients to penetrate Central and West Africa and building franchises
in Southern and East Africa.
2. Maintaining momentum of culture change
Initiatives taken in this direction included, Plan of a Culture Lekgotla for managers to
discuss and derive more value for customers from current culture, Consideration to
capitalize membership of Old Mutual Group, Changing the previous strategy of “Back to
the Top” to “Growing to Greatness” to reflect growth , To tackle strong risk culture,
company followed world class enterprise wide risk management, Change of command and
control organisational design to a decentralised model , Multiyear focus on importance of
culture
South Africa’s regulatory framework was still evolving and effect of legislation was still
unclear and strive to become leader in sustainability

Leadership

Boardman – As a leader

Personality Traits
Traits of the Boardman can be seen from various instances,
• Openness – The way he tried wide range of initiatives like adopting the voluntary
Equator principles framework, inviting all staff members to give inputs for selecting
the fifth value, etc

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 • Conscientiousness – The success of the initiatives of Boardman itself shows his
conscientiousness added to it are operational activities like active tracking and
measurement of a balanced scorecard which included various factors like value
creating, risk management and transformation further strengthens the evidence of
having conscientiousness as strength.
• Extroversion – Initiatives like “Talk with Tom” established extroversion of Boardman.
• Agreeableness and Neuroticism – No specific instances could be chalked out to show
the optimum level of both the traits required for the effective level, but various
employee centric initiatives mentioned can be used to established agreeableness of the
Boardman. Also, Neuroticism can be said to in control as there is no mention of the
same in the case.

Sources of Power
Boardman as a CEO, would have all the power bases (Legitimate, Reward, Expert, Referent
and Coercive) over employees and organization. But the most influential in his case, and what
worked for him was expertise. He already had overcome setbacks and challenges which gives
him the expertise. Also, he personally led Strategy, Value and Brand workshops shows his
expertise. (No information is provided regarding his other sources of power in the case, but
being CEO, it can be assumed that he could leverage all at some level)

Skills of Boardman as a leader

The case clearly establishes the presence of the following skills of boardman through
corresponding instances,
• Technical Skills – like the working of the banks and the environment in which
Nedbank is operating, levers that boardman can use to transform etc.
• Interpersonal Skills – Ways to involve employees and make them feel included and
use their support
• Conceptual Skills – Accessing the situation of the Nedbank and proposing five-point
plan for revival

Leadership effectiveness of Boardman

Leadership effectiveness of boardman could assess as follows:
Objective Measures

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 - Barret survey for cultural entropy changed from 25% to 10% (Lower the better) during
the tenure of Boardman.
- Customers grew from 4.8 million to 6 million in a saturated market.
- Nedbank become first financial service organization in South Africa to achieve Carbon
Neutrality.
- Nedbank become most empowered company in South Africa
Apart from the above measures achieved before retirement of Boardman, his initiatives
led to various achievements in later years as mentioned in the case.
Followers Perception
- Brown gave Boardman the credit for taking Nedbank along the “Journey Back to the
Top”.
The above-mentioned instances show that the Boardman was an effective leader.

Leadership Behaviour of Boardman

Boardman showed a high consideration – high structure behaviour. Instances of structured
behaviour can be seen from his five-point plan approach as well as the focus on measurement
of balanced score card. Similarly, his various employee initiatives which required his personal
involvement supports his high consideration behaviour.

Leadership Style of Boardman

Boardman showed Transformational Leadership, which could be established by following
instances in the Four I’s of the transformational leader.
• Inspirational Motivation: Setting up vision of, Nedbank becoming Southern Africa’s
most highly rated and respected bank” by its staff, clients, shareholders, regulators and
communities. “Journey back to the Top” initiative by the Boardman’s Executive team.
Lastly, using quotes from “Good to great” to inspire the employees.
• Idealized Influence: Focus on regulations and environmental sustainability and also
having significant achievements in the area shows the ethical standards displayed by
the Boardman. His personal involvement in employee initiatives like “Talk to Tom”
and SVB workshops, shows his ‘giving it all for the cause’ ideal behaviour.
• Individualised Consideration: “Talk to Tom” initiative was a platform for employees
to talk to Boardman for any suggestions and concerns, is an instance of individualized

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 consideration. Also, inviting all employees for selecting the fifth value shows the
considerate nature of Boardman.
• Intellectual Stimulation: No specific instance in the case could be attributed to this
section, but various mentions in the case of “Executive Committee” of Boardman can
be assumed to be an indicator of executive team actively involving in problem solving.

Brown-As a leader
Personality Traits
Openness – Moderate to high – Brown was open to innovation and learning. He encouraged
innovation by setting an example and creating my financial life at Nedbank.
Conscientiousness – Moderate – In the case, it appears that Brown is an organized and
dependable person. He is shown to lead by example. He is not too high on conscientiousness
can be determined by his emphasis on balanced lifestyle.

Sources of Power
1.) Legitimate Power – He was the CEO of Nedbank and possessed high legitimate power
given his position in the organization.
2.) Reward Power – Brown, being the CEO certainly could control rewards of the
employees in the organization and hence had a high reward power.
3.) Coercive Power – He had the ability to punish other employees for their behavior, given
his position in Nedbank.
4.) Expert Power – Brown was an industry veteran. He had spent 25 years in the banking
industry, with most of them being in Nedbank. He had been successful in what he did
over the past 25 years. Hence, he had a high expert power.
5.) Referent Power – Brown had successfully led the turnaround of Nedbank and ideally
should be respected in the organization given the work he has done for the organization.
He used to interact with the employees personally through “Talk to Mike”. Hence, we
can say that he had a high referent power.

Skills of Brown as a leader

• Technical Skills – Brown has spent more than 25 years in the banking industry and has
made his way up in the corporate ladder to become the CEO of Nedbank. From his
journey, we can say that he must possess good technical skills required for the Banking
industry.
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 • Interpersonal Skills – Brown is willing to listen to the employees in Nedbank, he
started the “Talk to Mike” blog. He possessed good communication and persuasion
skills evident by employees in the organization taking up innovation and leading by
example.
• Conceptual Skills – We cannot sufficiently determine from the case whether Brown
possesses conceptual skills like general analytical ability, logical thinking etc but given
his industry experience and leadership skills in transformation of Nedbank, he must
possess a good level of conceptual skills.

Leadership Effectiveness of Brown

• Objective Measures – In terms of metrics like Sales, net profits etc, Brown has done
a good job as a leader. The headline earnings had gone up by 21.4% and the economic
profit had gone up by 63.5% in the year 2012 over the previous year. The other financial
metrics were also good.
• Follower Perceptions – Brown believed in delegating and developing his employees,
and was hopeful that the next CEO would be able to build upon what he left behind.
We can assume that the follower perceptions would be good for Brown.
• Successful career as a leader – Brown definitely has proven his ability in this measure.
He has a good past record and respectable achievements in his career as a leader.

Leadership Behaviour of Brown

Brown displayed high relations-oriented behaviour. He interacted with the employees and
worked hard on removing the culture of distrust and fear in the organization. He encouraged
innovation and was able to successfully work towards the transformation of the organization.
Brown’s task-oriented behaviour cannot be interpreted from the case; however, we can assume
that he was able to get the tasks done as well given the success of Nedbank during his tenure.

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 As Brown is equally
concerned with the
performance of
Nedbank and the
satisfaction of the
employees, we can say
that his leadership
behaviour lies in the
top right quadrant of
the Consideration-
Figure 1: Matrix for Leadership Behaviour Initiating Structure
matrix.
Leadership Style of Brown
Brown follows Participative leadership; he was concerned about the development of the next
candidate for the CEO position in the bank. He is also mentioned to plan a culture Lekgotla in
which the top 300 managers would discuss the current culture of Nedbank and discuss how to
derive more value for customers from the effort with culture. We can clearly see instances of
joint decision making and delegation in the leadership style of Brown.

Change Management

Lewin’s Force Field Theory of Change

In Lewin's model there are forces driving change and forces restraining it. Where there is

equilibrium between the two sets of forces there will be no change. In order for change to

occur the driving force must exceed the restraining force. Following diagrams shows the

application of the Lewin’s Force Field Theory in the turnaround of Nedbank.

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 Resistance to Change Forces for Change

1.Complicated matrix structure • Need for Sustainable growth over

2.Lack of accountability and finding long run, in following four fronts :
faults in others Economic, Environmental, Social and
3.Focus on short term profitability Culture
4.Authoritative leadership of bank
managers under pressure Initiatives that led to increase in
5.Low morale and procrastinating
attitude power of Forces of change:
6.Low risk-taking culture impediment 1. Focus on all five major
in innovation stakeholders, staffs, clients,
regulators and
communities
2. Initiatives to organize and
energize staff, through
establishment of vision and
values, as well as employee
initiatives like “Talk to
Tom”.

Lewin’s Three Step Change Model

We analyse how the Lewin’s Three Step change model is applicable in the case of Nedbank.
Boardman quickly identified the problems with the organization and figured out what changes
there were to be made. He realized that corporate strategy and operations, corporate culture
and corporate leadership had to be reviewed and reinvented if the fortunes of the formerly

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second largest bank in South Africa were to be turned around. He came up with a plan and
followed the Lewin’s Three Steps to bring about change in the organization.
1.) Unfreeze – He realized that he needed to focus first on staff and make sure that the
employees are ready to change. He realized that the turnaround strategy would require
a change in the way people operated. Boardman personally led strategy, valued and
brand (SVB) workshops for the senior leadership of the bank to brainstorm strategic
direction, corporate aspirations, key focus areas and core values. There were dialogue
workshops organized for the employees and a lot of discussions took place during this
period.
2.) Change – Boardman, having successfully prepared the employees for change went on
to actually implement the change in the organization. After discussing with the
employees, the “Community Fair Share 2030” project was born. Nedbank became the
first African bank to adopt the Equator Principles, an international voluntary framework
aimed at ensuring a consistent approach to managing environment and social risks in
project finance. Boardman introduced the “Talk to Tom” initiative, in order to engage
the employees and get regular feedback. Boardman’s executive team also launched the
“Journey Back to the Top” initiative, which was meant to provide focus for initiatives
aimed at the turnaround of Nedbank.
3.) Refreeze – In order to make sure that whatever changes have been brought in stay and
the employees and organization in general does not move back to what it was before,
every employee was actively tracked and measured against a balanced scorecard, which
included value creating, risk management and transformation. There was regular
monitoring of the progress, with a turnaround office being put in place to monitor
progress on the strategic recovery. The bank was invested in personal mastery and
leadership development which paid off in the long run in implementing the change.

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Kotter’s Change Model
Stage Steps taken by Mr Boardman
1. Establishing a sense of urgency Boardman identified the problems and laid a clear plan
for Nedbank. He focused on making the staff ready for
change and allowing them to be a part of decisions for
change.

2. Forming a powerful guiding The SVB workshops and Dialogue sessions organizaed
coalition for the employees gave them the empowerment and
made them at par with Mr. Boardman's vision for
Nedbank in the future.

3. Developing a compelling vision Boardman worked on developing a vision in alignment

with the vision of the country for 2030 and the
"Community Fair Share 2030" plan was born after this.

4. Communicating the vision widely Boardman conducted meetings and sessions in order to
make sure that the employees are able to understand the
vision that they want to achieve for the organization.

5. Empowering employees to act on Boardman launched the "Talk to Tom" concept, to

the vision enable the employees directly share their concern with
him and the employees were involved in the decision
making process.

6. Generating short-term wins The organization went from doing poorly to excellent in
"The Barrett Survey" which indicated the degree of
"cultural entropy" in the system and became a healthy
bank.

7. Consolidating gains to create Nedbank changed from being a niche bank to being a
greater change bank for all and achieved great success during this
transition. It also ventured into sustainable avenues the
executive conducted sessions to make sure the
employees work.

8. Institutionalizing changes in the Boardman made sure that the changes implemented are
organization culture adopted and the bank reaches the top where it was
supposed to be. Brown was selected to succeed and was
the best candidate for the job.

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