PERFORMANCE MANAGEMENT IN THE BANKING INDUSTRY (A CASE STUDY OF FIDELITY BANK PLC)

ABSTRACT

There is no gain-saying that Performance Management has been a boiling topic, as to ascertain how an organisation is surviving in a fierce competitive environment. Managing issues like performance – a non-concrete element has posed a lot of tasks on managers of industries. This could be seen in the recent conclusion  of  mergers  and  acquisitions,  buy-outs  and  liquidations  of  many banks in Nigeria. Performance management does not only study the human asset of an organisation. The problem touched on profit, the main motive of any business venture, capitalisation, ethical issues, legal barriers and other obstacles that banking industry in particular encounter and the economy generally has to grapple with. The researcher used the survey research method. Questionnaires were designed and personally administered by the researcher on the bank’s staff selected randomly. Personal observations were undertaken. From these, inferences and deductions were possible, and then conclusion was thereafter made.  Chi-square  was  applied  to  the  hypotheses  to  confirm  the  research findings. The findings evidenced that staff performance must be taken to cognisance at all times as doing, otherwise would likely lead to low moral and invariably low productivity. Performance management should be applied at all levels of management, be it low, middle or high level of management. There should be no sacred goat when it comes to performance management. Profit alone is an indicator of performance in a bank. Items, such as assets quality, loan performance, staff welfare, deposit drive, low staff turnover, information technology, customers’ satisfaction etc. are many more factors used to indicate performance of  a particular bank.  It is recommended  that banks in Nigeria should beef up their capital base, perhaps to N50 billion. Some banks, on their own have exceeded this figure in readiness of next CBN pronouncement. For performances to be attained, banks should retrain their staff, sponsor them in regular seminars and  workshops, symposia, refresher courses etc.  From the totality of the work carried out it was concluded that performance management remains important and necessary in a banking industry or service organisation even the company appears to be performing well.

CHAPTER ONE INTRODUCTION

1.1     BACKGROUND INFORMATION

Performance in business is falling every day according to World Report but nevertheless, more and better products are being introduced into the markets. How can these two opposing and contrary statements be reconciled? This worrisome declaration is giving sleepless nights to not only managers of business organisations but watchers and users of the products being produced by industries.

Despite much writes-up and literatures on the topic, organisations are recording decline in output level, increased poor quality products, substandard goods, in fact, performance is almost the main issue for a well meaning organisation must tackle seriously; there is however hope that performance can be effectively can arrested if properly managed.  If companies can after much noise about poor performance declare huge and astonishing or “excess profits”, what and how then is performance declining? What then is performance? According to Hornby A. S., Performance is notable action or achievement”. This tells us that there should be a noticeable and outstanding achievement by men, machine and/or money (the 3Ms). But what do we notice today? Poor performance of these 3Ms is so dwindling that business environment is witnessing

closing down of many industries, failure in loans repayments, low profits by organisations or even loss-making being reported by many while so many others are closing shops. All these are attributed to performance inefficiencies.

Banks in Nigeria were caught in that web recently, hence the Central Bank of Nigeria Governor, Charles Soludo pronounced a “shocker” of N25 billion capital base from a meagre N2 billion. The aftermath was a series of mergers and acquisitions in the banking industry and collapse of some banks thereby reducing the 89 banks operating in the economy to just 24.

It appears that the 24 surviving banks have received a healthy certificate and this has rekindled the hope of Nigerian banking public to both save with the banks and invest in the banking sub-sector in the Nigerian Stock Exchange,  with  high  confidence.  Fidelity  Bank  Plc  was  one  of  such banks that survived the hurdles and is chosen by the researcher for this study.

1.2     STATEMENT OF THE PROBLEM

Performance management has been a boiling topic, as to ascertain how an organisation is surviving in a fierce competitive environment. Managing issues like performance – a non-concrete element has posed a lot of tasks

on managers of industries. Even some acclaimed pillars of industries, movers and shakers of the economy have at one occasion or the other got drowned in small rivers after swimming successfully across the mighty oceans. This could be seen in the recent conclusion of mergers and acquisitions, buy-outs and liquidations of many banks in Nigeria.

Performance management does not only study the human asset of an organisation, it considers many other factors that managers use to wriggle out from troubled sea, such as financial, quantitative and non-quantitative factors.

The problem touched on profit, the main motive of any business venture, capitalisation,  ethical  issues,  legal  barriers  and  other  obstacles  that banking industry in particular encounter and the economy generally has to grapple with.

1.3     OBJECTIVES OF THE RESEARCH

The general objective is to examine the Performance Management in the banking industry (A Case Study of Fidelity Bank Plc), while the specific objectives include:

(a)     The need for Fidelity Bank to be among the first 10 banks by  applying suitable performance management techniques to be

recommended here.

(b)      The need for the bank to satisfy its workforce by evaluating their performance and rewarding them according.

(c)       Bank’s need to apply all sorts of training (both home and abroad)

on the workers so as to improve their performance.

(d)      The use of appropriate incentives to motivate the staff.

(e)       Making the bank management see reason for evaluation of performance   in   order   to   tie   performance   appropriately with promotion.

(f)       Revealing the merits and demerits of performance evaluation on workers’ morale.

(g)      Using performance management as a tool for its survival strategy in the expected “second phase” of banks’ consolidation.

(h)      Pointing out to management of the bank some hindrances to implementing performance management in the banking industry.

1.4     SIGNIFICANCE OF THE STUDY

This research work is so important to many people in the society; from the bank directors to the bank management and staff, from research scholars to casual readers; from writers to general public. More importantly, the significance of the study may include the following:

(a)       The research will inform readers on what the concept “performance management” is all about.

(b)     It will elucidate the ways and means performance management can be undertaken.

(c)     The operators will draw immensely from the experience of other organisations, noting the gains and drawbacks of employing a particular method of evaluating performance in an organisation.

(d)      The concept of performance management may enlarge the scope of banking activities and hence less labour turnover.

(e)       Performance management will improve one of the management’s tools for gauging current operational standards — profit, and future plans.

(f)       It will give room to assess the company’s strengths and weaknesses in order to take appropriate measures when and where necessary.

1.5     SCOPE OF THE STUDY

This study will cover Fidelity Bank Plc headquarters. It is one of the banks that successfully recapitalised in the recent bank’s restructuring exercise prompted by the CBN pronouncement requiring banks to beef up their capital base to the tune of a minimum of N25 billion.

The study will also cover activities relating to performance management of some selected personnel that the bank used to wriggle itself out of the

troubled sea of the banks’ mergers, absorption, acquisition and outright liquidation of so many others.  These personnel will be examined  and interviewed in this study.

The number of bank’s staff that are chosen for the sampling frame are informed by their position and knowledge to supply reliable data on the topic under study and such were collected by means of questionnaires distributed personally by the researcher because if such a follow-up had not been done, there would probably have been reluctance on the part of the respondents to fill out and return the questionnaires through any other method by the busy bank personnel.

1.6     LIMITATIONS OF THE STUDY

This research work was confronted with some problems which are stated below:

–        Finance: Finance has constituted major hiccups in this research work because of the current situation of the economy. The cost of moving from one place -to another in order to source for information is too high. Surfing the Net has added more to the cost of project writing. Besides, prices of textbooks, magazines, journals and other written materials are too enormous. However, the high cost of obtaining information was not allowed to tamper with the  objective of this project and therefore did not hinder the quality of the report.

–        Time  Factor:  The  time  available  for  this  project  is  not  quite enough to allow detailed, elaborate and comprehensive job to be carried out. The time set aside by the university authority for the research  is short. Besides, the school activities were carried alongside with the research work. The staff of Fidelity Bank Plc believe their time would be more  precious  on  their  job  because  of  the  volume  of  activities engaged  by  the  bank  and  therefore  will  only allow a little time to respond   to   enquiries  in   respect  of   this  research.   Therefore,   most information has to be gathered from the bank journals, annual reports, staff book, management profile, memorandum and articles of association of the company and website, etc.

–        Information  Hoarding:  Fidelity  Bank  ethnics  and  policy  restricts bank staff from releasing some of the information at their disposal. Those information are very essential for the research work; therefore, I ensured that this critical information that is necessary for this research are obtained from the management and staff after assuring  them  the restrictive use of such information and confidentiality.

1.7     RESEARCH QUESTIONS

Some of these were the questions raised to the respondents’ responses upon which the analyses on Chapter Four were made. They are:

(a)   Is performance management necessary in a banking industry so long as the bank is doing well?

(b)      Is there any basis for performance management in a service-oriented organisation?

(c)       Is staff likely to produce more if his performance is not recognised and rewarded?

(d)      Is performance evaluation applicable to all levels of management? (e)      Is profit the only indicator of performance in your bank?

(f)       Should monetary reward be all that it takes to compensate efficient performance?

(g)      Can job enrichment improve performance?

(h)      Could adequate capitalisation of a bank lead to high performance?

1.8    HYPOTHESIS

(a)      Ho: Performance management does not hold the ace to bank’s survival.

H1: Performance management holds the ace to bank’s survival.

(b)     Ho: Performance evaluation does not aid management in decision- making.

HI: Performance evaluation aids management in decision-making. (c)     Ho: Performance evaluation is not necessary in a service industry.

HI: Performance evaluation is necessary in a service industry.

1.9     HISTORICAL BACKGROUND OF FIDELITY BANK PLC

“It takes knowledge and commitment to manage and multiply people’s wealth. We have both. And much more. Let’s talk today at Fidelity Bank”. “Fidelity Bank branch network has grown over the last two years, with an increasing number of young men and women on a mission to make financial services easy and accessible to our customers.

“Fidelity Bank servers an ever increasing number of consumer and wholesale banking customers and is well established in growth markets. “The o-line web-enabled integrated banking software called Finacle has impacted positively on our service delivery to the extent that customers now find it easier and more convenient to operate their accounts “.

The above are few of inviting slogans of Fidelity Bank Plc. They speak for themselves what makes the bank tick.

Fidelity  Bank,  with  its  head  office  at  Fidelity  House,  1  Fidelity Bank Close, Off Kofo Abayomi Street, Victoria Island, Lagos, Nigeria was incorporated on 19 November 1987 with a banking licence obtained

31 December 1987 and began banking operations on 3 June 1988 as an

investment (merchant) bank. It converted to a commercial bank on 16

July 1999 and registered as a public limited company on 10 August 1999. The bank obtained its universal banking licence on 6 February 2001. The shares were quoted on the Nigerian Stock Exchange on 17 May 2005. The

merger with the former FSB International Bank Plc and Manny Bank Plc

(under the Fidelity brand name) produced the enlarged Fidelity Bank Plc.

Fidelity bank is owned by Nigerian citizens and corporations with more than 150,000 shareholders holding 13,227,807,421 of the bank’s shares at

31 June 2007.

The bank, in September 2007 offered a combined offer for subscription and rights issue of 5,501,100,421 and 498,899,579 ordinary shares of 50 kobo each respectively, valued at N50 billion to enable it expand retail infrastructure, branch network, expand product distribution capabilities in the electronic banking space and deepen participation in power, oil and gas,  real  estate,  and  telecommunication  sectors.  This  offer  was  highly over-subscribed at the end of the exercise.

The technocrats that make the bank what it is today are 12 distinguished directors – all Nigerians, led by the board Chairman, Chief Christopher Ezeh.  while  Reginald  Ihejiahi is the Managing  Director  and  Chief Executive Officer.

As more branches are about to be opened across the country, the bank as at June 2007 had 93 branches, absorbing 1,421 staff who are well technologically driven young Nigerians. The bank was among the 15 qualified banks with shareholders’ fund above $1 billion that was appointed by the CBN to manage its excess foreign reserve.

For the financial year ended 30 June 2007 the bank made a gross earnings of N240 billion while profit after tax was N4.2 billion, customers’ deposits grew to  N177 billion  while  total assets and contingents  stood at N275 billion The shareholders got N2.6 billion in way of dividend i.e. 16 kobo per share – an indication of good performance management by the bank management  team.  According  to  the  chairman,  “all  these  go  to  prove Fidelity as one of the fastest growing banks in the industry”.

1.10   DEFINITION OF TERMS

CBN stands for Central Bank of Nigeria, the body at the apex of regulation of banks and non-bank financial institutions in Nigeria.

Cost Centres: is a location function or item of equipment in respect of which  costs  may  be  ascertained  and  related  to  cost  units  for  control purposes.

Decentralisation: means giving managers authority to make decisions.

Dysfunctional decision making – i.e. decisions made at a local level by divisional managers which profit his own division, but creates greater off- setting losses (or benefits forgone) to the company as a whole.

Excess profit: Profits considered above ‘normal’ by applying other parameters to gauge the profit made by an organisation.

Investment Centres: is a profit centre in which inputs are measured in terms of expenses, and outputs are measured in terms of revenue, and in which assets employed are also measured – the excess of revenue over expenditure then being related to assets employed.

Management: is considered as a social process which consists of planning, controlling, organising, co-ordinating, motivating which aids the  organisation  to  achieve  its  goal  or  getting  things  done  through people.  Organisation:  is  an  embodiment  of  resources;  physical  and human, which go through a process in order to generate output. Often, organisation has been defined as an entity involved in the process of production and distribution of what has been produced. This definition is drawn from the functional premise.

Performance: This is a notable action or achievement.

Profit Centres: A profit centre is any sub-unit of an organisation (e.g. divisions of a company) to which both revenues and costs are assigned, so that the profitability of the sub-unit may be measured.

Responsibility   accounting:   a   system   of   accounting   that   segregates revenues and costs into areas of personal responsibility in order to assess

the performance attained by persons to whom authority has been assigned.

RI – Residual income

ROCS — Return on capital employed.

ROI — Return on investment

Turnover: Labour turnover is the frequency with which labour is being engaged  and  disengaged  in  an  organisation,  while  turnover  may also mean sales.

₦5,000.00 – DOWNLOAD FULL PROJECT DOWNLOAD FULL PROJECT Added to cart

---

---

---

---

Related Project Topics :