This paper aims to integrate the theories of public relations and contemporary corporate communication management theories to analyse and make subsequent recommendations for the National Australia Bank. The National Australia Bank is a global organisation, which has experienced many crisis events throughout 2004 that have irrevocably damaged its reputation as perceived by its stakeholders. This paper discusses the company’s key corporate communication issues and then applies relevant theories relating to organisational cultural change, management of corporate change and reputation management to recommend a means of repair.RESEARCH Secondary research was undertaken to complete this paper through magazine articles in business publications and the financial services industry publications.
The corporate communication theories throughout the paper were derived from numerous textbook extracts and journal articles, which focus on core public relations theories and contemporary theories within corporate communication management. KEY MANAGEMENT ; CORPORATE COMMUNICATION ISSUES.Undeniably, the National Australia Bank (NAB) has experienced numerous negative events throughout the year, which have resulted in dire consequences on the organisation internally, externally and in relation to its many stakeholders. Such events include: 1.
Foreign currency trading scandal 2. Banking industry regulatory agency’s weakness in supervisory role 3. Senior Management and Board of Director resignations 4. Tax scandal in Ireland 5. NAB employee charged with money laundering 6.
Chief Executive John Stewart being evasive on blueprint to fix NAB Each of these occurrences has produced significant media exposure in a negative context and has also strongly effected NAB’s global reputation, internal corporate culture and its financial profitability. The most recent media exposure for NAB is a BRW article written by Adele Ferguson dated 7th October 2004 (please see Appendix 1). The article highlights many corporate communication issues the company faces along with its recent management changes.
The article also identifies the strategic direction proposed by the bank to ensure its future success. Aspects of the strategic direction proposed include a complete over-hall of the bank’s organisational culture with the aim of eliminating the slow and bureaucratic processes that currently hinder effective customer service. Such changes will require a high level of management during the corporate change to ensure its effectiveness. KEY MANAGEMENT & CORPORATE COMMUNICATION ISSUES cont.The importance of stable and effective management throughout the significant changes that NAB is about to commence is discussed in detail on page 10 of this paper, management of corporate change. Other key corporate communication issues relate to the organisation’s damaged reputation, which has been historically strong and positive. Another reputation issue the company faces is the negative press the financial services industry has received as a whole and also the scrutiny it’s subjected to within the political arena.
This makes the task of repair all the more difficult.The BRW article highlights the current situation for the National Australia Bank. The company has acknowledged the problems it currently has, it has undertaken an audit both internally and externally to research the exact issues and is soon to release a strategy to improve the prospects of the organisation.
Therefore, the company is well on its way to establishing a competent strategic planning and issues management strategy as a means of counteracting the negative issues it have faced throughout 2004. ORGANISATIONAL CULTURE.National Australia Bank’s new Chief E.xecutive, John Stewart was hired in February of this year with the aim to identify the key problem areas within the organisation and to implement a strategic and timely plan to rectify such problems. The most prominent issue facing the bank is its negative and inefficient organisational culture. Schein (1984) described organisational culture as “an organisation’s system of “social knowledge” that is shared among organisational members and transmitted by members across time”.
Put simply, it is shared values, a particular way of thinking and a consistent way of behaving amongst employees of an organisation.A strong organisational culture is imperative for the success of an organisation as it ensures the continuity of messages to stakeholders and decreases the need for company policies and procedure manuals because new employees are informed by the existing staff of the cultural expectations placed on them. In the case of NAB, a strong organisational culture does exist, however it is driven by dysfunctional motives and therefore decreases the effectiveness of the company rather than supports its success.
The BRW article details how Chief Executive John Stewart established what the cultural problems are within the company.Firstly, John Stewart regularly emailed the 200 most senior executives asking questions such as ‘what do you think is wrong with the organisation? ‘, ‘what is right with the organisation? ‘ and ‘what changes would you implement to improve the company? ‘. The Chief Executive also spoke directly with branch staff members to identify their views on the culture within the company. The information derived from the questioning proved useful as many of the answers were consistent and therefore highlighted the issues that were problematic across the organisation.ORGANISATIONAL CULTURE cont. This feedback together with analysis undertaken by PriceWaterhouseCoopers in its report on the National Australia Bank, highlighted the following issues: 1. the bank is focused on process rather than achieving customer satisfaction 2. there is a lack of accountability by employees across the organisation 3.
the culture is considered a “good news culture”, which results in important negative feedback being ignored and avoided 4. branch staff have minimal autonomy in their role or the ability to make decisions5. competitiveness and internal politics exists between departments rather than a team structure, which results in increased bureaucratic inefficiencies Such issues within an organisational culture have the ability to significantly reduce staff’s willingness and ability to satisfy customers therefore reducing the profitability of the company. Consequently, despite the NAB’s 40,000-employee strong culture, it is considered dysfunctional because the culture is driven by internal politics and it aims to maintain the status quo.This is a highly process-driven structure and is considered a formal style as apposed to an informal style, which is dynamic and adaptive to environmental changes. To convert the company to a less process-driven and a more dynamic player, the Chief Executive has amalgamated the bank’s three core domestic operations, which are retail banking, wealth management and corporate and institutional lending. The purpose of this merger is to promote team performance, to utilize the many cross-selling opportunities between departments and to decrease internal rivalries.ORGANISATIONAL CULTURE cont.
Chief Executive John Stewart has also altered 80% of the management positions in an attempt to decrease the sycophantic and arrogant behaviour amongst senior and middle management staff, which in turn, should flow onto other levels of the company’s organisational structure and prompt a more positive culture. Effectively, the new Chief Executive’s strategy in terms of altering the organisational culture is to decease bureaucratic barriers between departments and to promote a sense of cohesion among employees. ORGANISATIONAL CULTURE – RECOMMENDATIONS.Attempting to alter the structure of an organisation is a complex task and even more difficult, when attempting to alter the organisational culture of a company with 40,000 employees that share an imbedded set of beliefs and core values. Therefore, it is imperative that National Australia Bank carefully research and implement the strategy that aims to promote such a change. Firstly, NAB need to understand that employees seek meaning in their role and are significantly more productive when their personal attitudes and beliefs are aligned with the goals of the organisation.
Therefore, NAB need to clearly and concisely communicate with employees on the core value of the company, which is to satisfy customers and provide them with optimal service in comparison to competitors. Satisfied customers equals increased profits, increased profits equals happy shareholders. Also, a successful organisation increases in its level of success as employees maintain loyalty and a sense of belongingness to the company. Success breed’s success and employees are motivated and encouraged when the service encounter with customers results in a happy customer rather than an angry complaint.Importantly, employees need to be acknowledged and awarded for their achievements in providing a banking experience, which is efficient, trustworthy and value for money to the consumer. Not a service bogged down with bureaucratic processes. Such incentives may include monetary benefits, time off from work, an award recognised throughout the company or extra benefits such as a car park. It is also imperative that employees are acknowledged and awarded for challenging the status quo and presenting innovative solutions to organisational problems.
This helps the company remain dynamic, whilst improving internal relations with employees. ORGANISATIONAL CULTURE – RECOMMENDATIONS cont. A form of measurement is also recommended so that employees can evaluate their progress against set objectives and goals. Promoting a culture of goal setting is imperative in prompting enthusiasm amongst employees and to create a benchmark for the reward system. Unfortunately, regardless of an organisation’s skill in its ability to alter an internal culture, not all employees will be willing to change.It is common in this instance for some employees, particularly long-servicing employees to strongly resist change regardless of the positive arguments presented to them by the organisation. In this case, it is in the best interests of the organisation to cease the employment of these individuals.
It is recommended that NAB take this relevant action if required, particularly if the employee is in a management position, where they exude influence over other employees. MANAGEMENT OF CORPORATE CHANGE In the context of organisational change, Arena stated, “never before has the pace of change been so rapid”.This statement describes the ever-changing corporate world, which is subjected to continual movement in technology, legislation, competition and social and environmental regulations. As a result of this turbulent environment, it is imperative that organisation’s are dynamic and agile in its business operations to ensure its ability to adapt quickly and competitively to changes.
In the case of NAB, it is currently being affected by macro changes such as increased competition and recent legislative changes to the financial services industry.