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Performance Management by Targets in Our Banking Sector: A Case for Edward Deming’s Principles of Management By Jameela Ichalla
Undoubtedly, the Nigerian banking sector has come a long way since independence. In fact, it is one of the few examples of functionality in a society dominated by chaos. A number of factors have synergistically contributed towards this success. These would include; Ambitious founders and bank personnel, consumers, regulatory authorities, readily available capital, and the adoption of appropriate technology. The one thing all of these factors have in common is the fact that they all have a human element to them; either they are humans or they are driven by humans. It is therefore logical to state that the banking sector is dependent upon its people. It also follows that banks operating within the sector rely heavily on the intangible asset (human capital) to succeed. Although, I personally do not find Human Resources (HR) a fascinating subject, some happenings within our banking sector have propelled me to write this article.
Growing up with my mother, a woman for whom I have immense respect exposed me to the life of a typical Nigerian banker at a very tender age. In other words, I have a crystal clear picture of the ensuing discussion! She left home 6.30am in the morning and she didn’t dare return before 8pm as the traffic on Third Mainland Bridge or Ikorodu road wouldn’t permit. I admired my mother’s energy despite being a child with a great deal of energy myself. I asked her many questions regarding the operations of a bank, from interest rates to her salary. I was however too young to understand her motivation and didn’t pester her too much since I even had some of my own preconceived ideas. I admired her so much that I nursed my childhood dream of becoming a banker until it became a reality. Indeed a stark reality it has become. I dreamt that one day I would become like Mummy, I would dress smartly in expensive suits, and earn a fat salary. God blessed me so much so that I was able to obtain highly relevant degrees from reputable institutions. For me there was no obstacle in the way. Getting into a leading bank was like natural progression. Today, I am a true daughter of my mother and expectedly, I can now see things through the bird’s eye. A week in banking and I say to mummy, “what was your motivation?” She explained that it was my first proper job and it will take some time before I got used to it. Things would be much better one day after I settle in. That long awaited day never came as the state of affairs in the industry was not the way mummy imagined. The compass of my intellectual curiosity is now pointing in other directions, far away from banking. The reason for this simply put …unreasonable targets!!!
(Gooder, 1992) defines targets as imposed standards, intended as a means of encouraging change. Management by targets is a modern form of the famous Management by Objectives (MBO) which was popularised by Peter Drucker in 1954. The process involves joint identification of common goals by superior and subordinate managers, defining each individual’s major area of responsibility in terms of the results expected, using these measures as guides for operating the unit and assessing the contribution of each of its members. It is easily deducible that targets are not an end in themselves but rather they are a means to an end. They are a tool for concentrating attention where it is needed. MBO is instructive and there is an emphasis in measuring results. MBO has been implemented with mixed results in various organisations across the globe. It is no surprise that various scholars and practitioners (Kelly, 1983, Deming, 1986, Tribus, Goldratt, Seddon, 2003) including Drucker himself have discounted its effectiveness. Edward Deming proposed 14 points of management which are commonly referred to as the ten commandments of management. Their proven effectiveness lay in the fact that they formed the basis for the transformation of post war Japan and the American industry. Deming explicitly states in points 10 & 11: “Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity” and “Eliminate work standards (quotas), substitute leadership, Eliminate MBO, Eliminate Numerical goals, substitute leadership”. Critics argue that MBO is analogous to driving a car by the rear view mirror while targets are ubiquitous and capricious. They fulfil the bureaucratic requirements of reporting and are imposed with authority by people who are generally detached from the work. In an average Nigerian retail bank, management is responsible for setting these priorities.
Proponents of the use of targets argue that a great disservice has been done to this great tool of management with the ability to deliver breakthrough results. Whether targets are responsible for delivering breakthrough results in the banking sector, I can’t say. I can only say what is backed up by evidence; the fact that banks are now compromising quality for quantity. A high degree of unprofessionalism is displayed by the so called “human capital”. As Deming rightly put forth; “targets increase the possibility of making people focus on the wrong things”. Bankers now place more emphasis on achieving their targets rather than upholding the values of their banks. They would even condescend to engaging in immoral acts in exchange for patronage. The primary aim becomes to please the boss. Efforts are concentrated towards securing deposits of billions of naira; the imposed customer therefore becomes management. Professional ethics has been given a massive blow in the face. For clarity purposes, male bankers are as guilty as their female counterparts. At last, a world where gender equality prevails, it is a man’s world everywhere but banking.
I personally support a shift in emphasis from the sole use of paper qualifications as the basis for career progression in Nigeria. A combination of factors should be used instead. Ideally, these should include; academic achievement, on-the-job performance, dedication to duty, alignment of individual goals to organisational goals, length of service etc. My view is in agreement with the concept of MBO to the extent that I have included performance as one of the criteria for employee appraisal. Like Drucker, I stress the need for participation, systemic appraisals and rewards tied to performance. The point where Drucker and I part is precisely where Deming and I agree; Performance Management Technique. I question the value of targets and can categorically state that they should not only be reduced (as the CBN recommends) but totally discontinued. In other words, to do less of a wrong thing is to change nothing at all. MBO is a sine qua non of all management; therefore there is nothing so unique about the existence of objectives that demand their use as the basis for management systems. In summary, objectives always exist and are always managed, why all the fuss?
“Organisations are often so consumed by the pressures to achieve their short term performance targets that taking the time to plan for the future is a luxury they cant afford”(Goldratt). This is not hear say, I heard this conversation with my own ears. A banker saying to a customer: “Oga please help me, I just need your money to stay in this bank till the 31st of December so I can meet my target”. Such unfair pressure on professionals encourages the achievement of short term at the detriment of long term objectives. This is unthinkable in civilised societies and is indeed a strong justification of Deming’s referral of MBO as management by fear. Exhortations only create adversarial relationships, thereby hindering cooperation and teamwork. Perhaps, overemphasis on achieving short term targets (acquiring new customers) is a plausible explanation of why marketing staff neglect a core principle of marketing (relationship marketing to existing customers). I enjoin the likes of Charles Soludo to restore sanity to the sector. The likes of Jim Ovia, Tony Elumelu, and Cecilia Ibru should stop turning a blind eye to these happenings as the consequences of these actions are on the way. I agree that organisational prosperity should be the priority of every executive; nevertheless, I resent the method used in achieving this prosperity. Nigeria is the biggest potential market in Africa; aggressive marketing of financial products and not financial people would yield lasting results.
Jameela Ichalla, writes from Brighton Business School, UK
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