THE ROLE OF CORPORATE IMAGE MANAGEMENT ON BANK’S PERFORMANCE (A COMPARATIVE STUDY OF FIRST BANK PLC AND UNION BANK PLC)

ABSTRACT

Banks in Nigeria have failed to realize the role a good corporate image play in business dealings. This is probably because they do not understand the concept of corporate image and necessary tools for promoting same. Corproate image, in f act, goes beyond attractive corporate office, producing quality products or rendering quality service, advertising, paying good salary and so on.   It pervades every aspect of a business concern-from the least worker’s personality to the dealings within the organization and with the large society. In the face of the dynamics of our society especially in the business world, brought about by technology banks are faced with stiff competition that maintaining a competitive edge requires aggressive strategies.   One of such strategies is effective corporate image management and promotion. The focus of this research work was to investigate the strategies that could be employed to build and promote corporate image effectively in order to enhance the performance of banks. Research was  conducted on two  of the commercial banks in Nigeria (First bank and Union bank) to show a comparative effect of image management on its performance. These two banks were selected because they are the two generation banks and it representes the true position of different banks in Nigeria. In chapter 3 statistical tools were used to conduct the study such as the chi-square method. Also the researcher made use of both primary and secondary method of data collection.   Chapter four formed the data presentation and analysis of data collection through the questionnaire. The  research hypothesis were also tested using the chi-square test. In chapter five, the findings of the study was summarized with relevant recommendations made and the outcome of the study was concluded. Finally, this researcher leaves this work open to constructive criticisms and expects future scholars to delve into further research and improve on this work.

CHAPTER ONE INTRODUCTION

1.1    BACKGROUND OF THE STUDY

Banks are financial institutions and financial intermediaries that accepts deposits and channels these deposits into lending activities either directly through loans, overdrafts or through capital markets. Banks also serve the strategic role of fund intermediation that is, mobilizing financial resources from the surplus units and channelling them to the deficit units.  The banking sector also acts as the nerve centre of any modern economy, being the repository of peoples wealth and suppliers of credit which lubricates the engine of growth of the entire economic system. It is also widely accepted as a necessary condition for an effective functioning of a nations economy.

The  Nigerian  Banking  sector has witnessed far-reaching transformation since the advent of modern banking in 1892.   In spite of all these developments, the fundamental nature of banking has remained basically the same.  In the early stages of banking development, bankers were respected and almost worshipped in the society. Banking was considered a noble

profession and seen as  a business for hardworking and serious minded people. The core business of banking being fund intermediation and the main source of income and profitability was the difference between the rate at which funds were borrowed and the rate at which they were invested or loaned out to the deficit units. Consequently, bank management concentrated mainly on risk managements as they balance assets and liabilities and joggle between borrowing and lending rates.   In those days, bankers knew that it was the confidence that the public had in the system that propelled and kept the bank in business.   The public saw bankers as people with integrity who could be trusted even in their personal dealings. Then the local farmer could entrust his life earnings with a banker without asking for any paper and still have implicit confidence that his money was safe and could be collected any time on demands.

With time, the banking sector experienced rapid changes, especially in the wake of deregulation of the system which led to the rapid expansion of the financial service sector and this heightened competition.  This perhaps, led to the adoption of the machiavellian principle of the end justifies the

means’ in bank management for many of the operators.  People who were not professionally and morally equipped but who had the financial resources to go into banking flooded the sector as operators and investors. The rapid expansion placed undue pressure on the tinted pool of skilled manpower available to the sector  –  a  situation  which  encouraged  staff  poaching,  and its attendant unethical practices.

Today, the banking industry is characterized by globalization, standardization, fast technological changes and large scale advantages.  These  changes  have  resulted  in questions  being raised among banks such as “who are we’? and `what kind of business do we operate”? questions that are closely related to management  of  identity and  image  (Balmer 2001,  Hatch  and Schultz, 1997, Whetten 1985).   Thus, the constant changes experienced  within  the  banking  industry have  led  not  only to intense competition among the banks but also making the banks to portray its image intensively (Bloemer et al, 1998). Also banking is a business built on trust and the major ingredient that gives flavour to the strategic roles played by the banks in the economy is confidence at such the corporate image remains a vital

priceless assets that will not only strengthen the already existing public confidence but attract more customers to the bank.   It is therefore, more important for banks to understand their customers and the image perceived by customers of the organization (Yavas and Shemwell 1996). Furthermore, the heightened level of competition has led to strategic questions regarding how the banks should differentiate themselves from competitors thereby leading to different banks trying to portray its corproate image and identity the best way they can.

Developing a strong identity and image is an effective way for banks to find a unique position in the financial market (Flavian et al, 2004, Balmer and Stotvia, 1997, Yavas and Shemwell, 1996, Van Heerden and Puth 1995). It is also an effective way for banks to increase its profits and advantage on customers due to increased  public  confidence.  This  will  therefore  increase bank performance. Consequently,   developing a strong image is an imperative  task  for  most  banks  and  according  to  Worcester (1997), it is not an optional activity rather, it is an important part of bank strategy. At such, corporate image promotion should not be left in the

hands of the public relation offices, but should be the responsibility of management, and indeed every member of staff.  This implies that the image programme should be part of the overall planning for the bank’s future. No matter   how impressive a bank’s achievements are, they must be properly presented in the public to acknowledged them. Thus, corporate image planning is an integral part of policy decision.

Aaker and Myers (1975:138) states that

“It is not exaggeration to say that a good image is fundamental to the existence of any business enterprises.   The concept of image   is often considered to be an important determinant of long term sales and profits. Therefore,   it is reasonable to consider the use of image as an objective not only for an advertising program but for marketing program and an organization as a whole.

Finally,  in  order  to  gain  support  from  the  public,  the corporate  image  must  show that  management  is  progressive, mobile, open to innovation, fair to all and free of dogma and convention.  Creating and promoting a corporate image effectively is mainly a matter of communicating bank’s

objectives,  beliefs,  reputation  and  achievement  to  its  several publics in order to gain their goodwill.

1.2    STATEMENT OF PROBLEM

Adequate emphasis have not been laid by banks in terms of promoting  a favourable corporate image  and this attitude has affected their performance in the market, more so, in the face of the prevailing staff competition among banks.

The environment in which banking business operates is in constant change and it constitutes an important factor in that it affects management decision and actions. For any business, two types of environment exist. The operating environment which may be  classified  into external  forces  comprising economic, social, political, cultural, governmental, technological; internal forces comprising the top management, the employees, and the task force; and the public environment which is made up of the bank’s several policies.   The environment within which banks operate today does not help matters of all due to the negative issues emanating from the business environment.  One example is the moral  decadence  that  has  pervaded  the  entire  society.    The society now place

great emphasis on money without any concern for the source or the mode of its acquisition. This has bred corruption.

Therefore for a bank for remain in business, it has to adopt to or help to shape its environment. This can be done by forecasting future states of these forces for the bank. Forecasting as a business technique is important because of the rapid change that the operating environment undergoes.

Aside from the influence of the environment, the image of the bank is another factor that requires consideration. The type of image which the bank projects, is an important determinants of its long run existence and performance. Most banks portray negative image to the public. According to Alabi (2002), he posited that the general public particularly the principal actors in the other sectors of the economy perceive the banking sector as a parasite on the national  economy.  He  noted  that  people  with  this  type  of perception believe that the banks are there to milk their customers dry through high interest rates and high multifarious service charges, interested in collecting and not giving, do not give enough support to the productive sector, such as manufacturing and small and

medium scale enterprises (SMEs) and also using the female bankers as individual whose gender is exploited for cheap commercial  consideration  in  the  guise  of  marketing  banking service and products. Also the public see the sector as a place for fraudulent practice as a result to their levels of involvement in fraud and forgeries. These are to mention but a few.

Another issue here, is that corporate image management is not well promoted as a result of poor managerial functions. “Planning for instance, which contains the image programmes are taking for granted in many banks. This has been responsible for the poor performance in the Nigerian banking sector.  Most bank’s emphasis is placed more on profit objectives ignoring modern philosophies of management such as social responsibility which is crucial to the projection of the desired corporate image.

There are however, a number of factors that have contributed to the poor image of banks and they are summarized below:

a)The  general  atmosphere  of  moral  decadence,  which  the

Nigerian business environment presented.

b)The greed of many players in the sector.

c)The liberalization of the sector and the corresponding upsurge in the number of banks led to the over stretching of the limited number of qualified personnel in the industry.

d)Pressure from managements in haste to impress their shareholders with impressive results. Such pressure results in the setting of unrealistic and unattainable targets for staff who are often forced to meet such targets by any means under the guise that “the end justifies the mean”.

e)The stiff completion in the sector has led to practitioners cutting corners in order to outwit each other thereby paying less attention to ethics and professionalism.

f)Boardroom squabbles which sometimes end up in courts and earn the bank negative publicity in the media.

g)Inadequate attention to the good corporate governance. h)Flamboyant lifestyle of bankers which make the public look at

most bankers with suspicion.

i)Lack of information on banks contribution to social responsibility.

j)Reluctance by banks to prosecute fraudsters due to delays in the judicial system and possible adverse publicity.

k)Bank failures and the culpability of senior members of the profession

l)Bad performance and inefficient management

m)Undue publicity given to infractions by banks and to the penalty imposed by the regulatory authorities by the mass media.

n)Low level of financial literacy by media practitioners: This has resulted in wrong interpretation of reported financial performance by banks.

o)Dearth of knowledge of the activities of banks by the general public.

1.3OBJECTIVES OF THE STUDY

For any banking business to successfully survive, it must recognize the importance of portraying and managing   good corporate image.  Also owing to the fact that every aspect of the environment is undergoing accelerated change, and no

function of management is  changing more rapidly than public attitudes and reactions, the corporate image itself should be constantly and effectively promoted.

The purpose of this study is to evaluate the problems of building, managing and projecting effectively a favourable image in the banking sector, but with particular reference to First Bank and Union Bank Plc Enugu in Nigeria, focusing on:

a)To find out if the banks are involved in image management.

b)To   determine   the   strategies   for   building,   managing   and promoting a favourable corporate image.

c)To determine the effects of corporate image on its performance. d)To identify the factors which contributes to the declining image of

banks  and  to  proffer  solutions  and  recommendations  to these problems.

1.4RESEARCH QUESTIONS

The research questions are formulated to help the researcher carry out the study well. They are as follows:

a)What is corporate image management?

b)To  what  extent  has  the  banking  sector  layed  adequate emphases on good corproate image.

c)What are the strategies adopted by banks in building, managing and projecting a good corproate image.

d)What are the effects of corporate image management on banks performance.

e)What  are  the  problems  affecting  a  good  corporate  image management.

f)What are the preferred solutions to the problems.

1.5HYPOTHESES

In pursuit of the objectives of identifying the role of corporate image management on banks performance, the following hypothesis have been formulated which is intended to be tested in the course of this study.

Ho:The extent in which the banking sector layed emphasis on corporate image management is not adequate.

H1:The extent in which the banking sector layed emphasis on corporate image management is adequate.

Ho:They are not effective strategies adopted by (First Bank and Union Bank) in building, managing and projecting a good corporate image.

H1:They are effective strategies adopted by (First Bank and Union Bank) in building, managing and projecting a good corporate image.

Ho:The effects of corporate image management on bank’s performance is not high.

H1:The effects of corporate image management on bank’s performance is high.

Ho:The problems affecting a good corporate image management are not many.

Ho:The problems affecting a good corporate image management are many.

1.6SIGNIFICANCE OF THE STUDY

Image has to do with the impression in the public consciousness. it is the desire of every organization to   have a good image. For corporate entity especially, the image of banks and bankers appear to be at its lowest ebb at present.

It is imperative that a way to turn around the declining image of banks be found very urgently.  It is from this standpoint that this study becomes very important in the crusade to restore the lost glory of banking in Nigeria.

The study is also of immense importance to bring to the awareness of the public and management of banks he role image management  play in  bank  performance  using  First  Bank  and Union Bank of Nigeria.

It will also help to understand the strategies the banks adopt in  building,  managing  and  promoting  a  favourable  corporate image.

The management of these banks will benefit from this study as it will review and explain the circumstances and factors which contribute to the image management problems. The recommendation of the end of the study will enable the management to take adequate measures that will forestall the reoccurrence of these problems.

Finally, the study will be of great significance to both the banking sector, customers of the banks, the general public and the students for academic purposes who wish to carry out studies on the subject matter in the future.

1.7SCOPE OF THE STUDY

In carrying out the research, attention was focused on commercial banks with particular reference to First Bank Plc and Union Bank Plc, Enugu State.

Even though the study will be made from limited banking institution, it is expected that findings will not differ from opinions of staff of other banks since they have related experience, education and training.

1.8LIMITATION OF THE STUDY

Conducting a research of this nature is not without some constraints. The major constraints encountered in this research work are:

1.The obvious attempts by banks to classify most of their information that is necessary for the completion of this work due to certain management policies.

2.The financial impediments or constraints which made the cost of carrying out the research to be expensive.

3.Biased and uncooperative attitude of some staff members. This limited the amount  of information at the disposal of the researcher.

4.Again, given the general background of lack of transparency among most of our financial institutions, one should naturally treat with  caution, answers  from  respondents  particularly those touching on self appraisal of its image.

5.The study would have been more extensive if more banks in the industry were included in the study. This was due to limited financial resources and lack of time.

6.Delay in filling and returning questionnaire by respondents.

On the whole, academic stress added to the problems but the researcher made the best efforts in optimizing the available resources and information without allowing the limitations to make the researcher lose sight of the quality of the final output.   In essence, these limitations do not impinge on the validity of this work.

1.9DEFINITION OF TERMS

!   Corporate Image

This comprises all the visual, verbal and behavioural element that makes up an organization and that is been

portrayed.

!Corporate Identity

The symbol or features that identifies or separate on entity against the other.

!Corporate Reputation

General impression or perception about the corporate standing of an organization.

!Corporate Communication It  is  the  process  that  transfers  or  communicate  a  company’s identity to the public  in order for the public to view the company based on its sent messages.

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