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MANAGERIAL DECENTRALIZATION IN NIGERIAN BANKS:
CASE STUDIES OF SELECTED BANKS
DISSERTATION
Presented to the Graduate Council of the
North Texas State University in Par t ia l
Fulfilment of the Requirements
For the Degree of
DOCTOR OF PHILOSOPHY
By
Leonard Okonkwo Ottih, M.B.A.
Denton, Texas
August, 1981
Ottih, Leonard Okonkwo, Managerial Decentralization in
Nigerian Banks: Case Studies of Selected Banks. Doctor of Philosophy
(College Teaching - Business Administration), August, 1981, 194 pp. ,
42 tables, 2 i l lustrations, bibliography, 70 t i t les .
The purposes of this study were to ascer ta in the status of man-
agerial decentralization in several types of Nigerian banks, to identify
the training needs for managerial decentralization, and finally to
develop a model for managerial decentralization for the banks studied
if the findings warranted it.
The study utilized the "Multiple Case Studies Approach" and
four banks were studied. Included in the group of banks was one of the
three largest banks in the country, one commercial bank with the full
allowable foreign participation, one government owned bank, and one
other indigenously owned bank. There were ten manager interviewees
at each of the four banks. An interview guide was designed and used to
seek information pertaining to six major r e sea rch questions.
The following conclusions were drawn f rom the analyzed data.
1. Some of the managers were not aware of written information
about organizational purposes, goals, and policies.
2. There is a low level of delegation and subordinates ' part ici-
pation in decision-making.
3. A large majori ty of the managers indicated that decisions
are not made where the operation takes place.
4. Managerial decentralization is presently difficult because of
the lack of trained managers .
5. Organizational environment necessi tates managerial iy-
decentralized s t ruc tures .
6. Managerial decentralization is not viewed favorably by a
majori ty of the managers interviewed.
7. The management of the human side of the enterpr ise is
judged to be very important but the existing in-house training programs
only sparsely t reat this a rea .
8. Analytical problem-solving ability is regarded as being very
important for managerial decentralization by an overwhelming majori ty
of the managers interviewed.
9. University curriculum for management development should
emphasize the following subjects and in order of importance those a re :
(1) administrative management subjects: problem-solving, management/
administration, and business policy formulation; (2) human management
and interpersonal behavior: motivation, communication, and organi-
zational behavior; and (3) the functional a reas of business adminis t ra-
tion: finance, operations management, marketing, accounting, and
computer science. A more detailed educational model is provided.
© 1981
LEONARD OKONKWO OTTIH
All Rights Reserved
TABLE OF CONTENTS
Page LIST OF TABLES
Chapter
I. INTRODUCTION
Statement of the Problem Research Questions Background and Significance of the Study-Basic Assumptions Delimitations Definition of Te rms Procedures for the Collection of Data Procedures for the Development of the Model Chapter Bibliography
II. REVIEW OF THE RELATED LITERATURE 22
The Environment of the Nigerian Banking Sector Organization Design: a contingency analysis Training Needs for Managerial Decentralization Chapter Bibliography
III. PROCEDURES OF THE STUDY AND DATA PRESENTATION 59
Research Methodology The Population of the Study The Study Instrument Data Collection Procedures for Presentation of Data Explanation of Ranking Methodology Case Study—Bank A Case Study—Bank B Case Study--Bank C Case Study—Bank D Aggregate Treatment of the Four Banks Chapter Bibliography
111
TABLE OF CONTENTS--Continued
Chapter Page
IV. SUMMARY, CONCLUSIONS, RECOMMENDATION, AND A MANAGERIAL DECENTRALIZATION MODEL 162
Summary of the Study-Conclusions Recommendation A Managerial Decentralization Model Chapter Bibliography
APPENDICES 178
BIBLIOGRAPHY 189
IV
LIST OF TABLES
Table Page
I. Organization Chart of Bank A 66
II. Managers ' Knowledge of Information and Managers ' Delegation Pract ices in Bank A 68
III. A Linear Responsibility Chart to Show Authority Interrelationship and the Level of Delegation of Decision-making in Bank A 71
IV. Fac tors Affecting Decentralization in Bank A . . . . 73
V. The Attitudes of Bank A Managers Toward Sub-ordinate Participation in Decision-making . . . 75
VI. Competency Areas in Which Interviewees Have
Received Training 77
VII. Competencies for Managerial Decentralization . . . 79
VIII. P rograms for Developing Competencies for Decentralization According to Bank A Mana-gers Interviewed 81
IX. Subjects to Emphasize in University Curriculum for Management Development According to Bank A Interviewees 82
X. Managers ' Knowledge of Information and Mana-gers ' Delegation Pract ices in Bank B 86
XI. A Linear Responsibility Chart to Show Authority Interrelationship and the Level of Delegation of Decision-making in Bank B 89
XII. Fac tors Affecting Decentralization in Bank B . . . . 91
XIII. The Attitudes of Bank B Managers Toward Sub-ordinate Participation in Decision-making . . . 93
v
Table Page
XIV. Competency Areas in Which Interviewees in Bank B Have Received Training 95
XV. Competencies for Managerial Decentralization According to Interviewees in Bank B . . . . . . 96
XVI. P rograms for Developing Competencies for Decentralization According to Bank B Mana-gers Interviewed 98
XVII. Subjects to Emphasize in University Curriculum for Management Development According to Bank B Interviewees 100
XVIII. Managers ' Knowledge of Information and Mana-gers ' Delegation Pract ices in Bank C 104
XIX. A Linear Responsibility Chart to Show Authority Interrelationship and the Level of Delegation of Decision-making in Bank C 107
XXI. Fac tors Affecting Decentralization in Bank C . . . . 110
XXII. The Attitudes of Bank C Managers Toward Sub-ordinate Participation in Decision-making . . . I l l
XXIII. Competency Areas in Which Interviewed Bank C Managers Have Received Training 114
XXIV. Competencies for Managerial Decentralization According to Interviewed Bank C Managers . . . 115
XXV. P rograms for Developing Competencies for Decentralization According to Bank C Mana-gers Interviewed 116
XXVI. Subjects to Emphasize in University Curriculum for Management Development According to Bank C Interviewees 118
XXVII. Managers ' Knowledge of Information and Mana-gers ' Delegation Pract ices in Bank D 121
VI
Table Page
XXVIII. A Linear Responsibility Chart to Show Authority Interrelationship and the Level of Delegation of Decision-making in Bank D 124
XXIX. Factors Affecting Decentralization in Bank D . . . . 127
XXX. The Attitudes of Bank D Managers Toward Sub-ordinate Participation in Decision-making. . . . 128
XXXI. Competency Areas in Which Interviewees Have Received Training 131
XXXII. Competencies for Managerial Decentralization According to Bank D Managers Interviewed . . . 132
XXXIII. P rograms for Developing Competencies for Decentralization According to Bank D Mana-gers Interviewed 133
XXXIV. Subjects to Emphasize in University Curriculum for Management Development According to Bank D Interviewees 135
XXXV. Managers ' Knowledge of Information and Mana-gers ' Delegation Pract ices in Each of the Four Banks 139
XXXVI. A Linear Responsibility Chart to Show Authority Interrelationship and the Level of Delegation of Decision-making Among the Four Banks . . . 144
XXXVII. Situational Variables Affecting Decentralization As Seen by the Top Executives of Each of the Four Banks 147
XXXVIII. The Attitude of All Interviewed Bank Managers Toward Subordinate Participation in Decision-making 150
XXXIX. Areas in Which All Interviewed Managers Have Received Training 152
vn
Table Page
XXXX. Competencies for Managerial Decentralization: Opinions of All Managers Interviewed 153
XXXXI. P rograms for Developing Competencies for De-centralization According to All Interviewed Managers 155
XXXXII. Subjects to Emphasize in University Curriculum for Management Development: Opinions of All Managers Interviewed 156
v m
LIST OF ILLUSTRATIONS
Figure Page
1. A General Systems Approach to Managerial Decentralization 168
2. An Idealized Participation Plan 175
IX
CHAPTER I
INTRODUCTION
The process of managing in a dynamic growth industry often in-
volves unique challenges and problems. The situation becomes more
challenging when the problems of economic development a re brought to
bear upon it. The Nigerian Enterpr i ses Promotion Decree (27, p. 79)
and the Rural Banking Scheme (23, p. 1736) a re two recent environ-
mental factors which have added strain to the already precarious
situation of management development in the Nigerian banking industry.
A sys tem's perspective will i l lustrate the nature of this problem.
Briefly, this approach is an "input - processing - output" f ramework.
In the banking situation, it can be interpreted as acquiring funds or
deposits (input), activities designed to expedite banking operations and
services (processing), and lending, safe keeping, and so forth (output).
This input, processing, output f ramework cannot be efficiently and ef-
fectively completed unless managerial competency is available.
In the Nigerian case, there a re a scarci ty of well-trained bank
managers and a shortage of the training programs and pract ices. The
views of most national and international leaders and experts a re that a
major cause of the re tarded progress of most under-developed coun-
t r i e s , of which Nigeria is one, is the underdevelopment of managerial
1
capability in a very broad sense (17, p. 97). Generally speaking, there
a re two ways that managers can be developed. One is the education of
managers in the universities and other management institutes; the
other is the in-house development of managers in the profit and non-
profit organizations. Many organizations in Nigeria a re unable to
exploit the potential in the latter development device (28, p. 266). One
way to exploit this development potential is to adopt an organization
s t ructure which encourages such attitudes and actions as openness,
delegation of authority, management by objective, motivation.
Two of the management devices that can be helpful in the de-
velopment of managerial competency a re managerial decentralization
and delegation. In Nigeria, however, the general trend has been toward
increased centralization of control and deepening of the bureaucrat i -
cation process (28, p. 271). There a re two reasons for this: (1) the
traditional authority systems of most of Niger ia 's cultures a re char-
acterized by obedience to authority f igures; (2) managerial decentral i -
zation and delegation are most feasible when managerial competency
is available, as it is not in Nigeria. The organization s t ructure used
at these banks may therefore be a major impediment to the development
of managerial competence. There should be a study of the state of
managerial decentralization and a general assessment of the needs for
management education to a r r ive at methods and recommendations that
will facili tate bank management development and thus make the Rural
Banking Scheme and the ent i re banking i n f r a - s t r u c t u r e an effect ive in-
s t rument of economic p rog re s s .
Statement of the P rob lem
The problems of this study were to a sce r t a in the s ta tus of m a n -
age r i a l decentra l iza t ion in se lec ted Nigerian banks (as r epo r t ed by
manage r s of those banks) and to identify the t ra in ing needs for mana -
ger ia l decentra l iza t ion in those banks. A model for manage r i a l
decentra l iza t ion was to be developed if the findings of this study
warran ted it.
Resea rch Questions
1. What is the s ta tus of Manager ia l Decentra l izat ion in the se lec ted
banks ?
2. What a r e the key var iab les that influence decentra l iza t ion in the
selected banks?
3. What a r e the at t i tudes of the bank managers toward decen t ra l i -
zation of decision making?
4. What t ra in ing, if any, have bank manage r s had in the ski l ls needed
for decent ra l iza t ion?
5. What genera l management competencies do the bank manage r s con-
s ider nece s sa ry for manager i a l decent ra l iza t ion?
6. How may the needed competencies best be developed?
Background and Significance of The Study
The general situation in the field of management which prevails
in most developing countries equally prevails to Nigeria. Since the
political independence of Nigeria, the central and local governments
have been increasing their interest in and investing a lot of money in
management education. The recommendations of the Ashby Com-
mission (28, p. 303) form the basis of Nigeria 's management education
program. The main recommendation was that a national center of
higher management education be incorporated in one of the univer-
s i t ies . Lagos was selected as the site. Other recommendations were
(1) in co-operation with employers, technical institutes should provide
short courses for potential supervisors and foremen; (2) degree
courses in commerce and business administration should be added to
the curriculum in the universities as is the fashion in the United States
of America; and (3) that evening courses in higher management should
be provided at post-graduate level in the universities and institutes.
P rogress has been made in management education since the
Ashby Commission recommendations. The federa l and state govern-
ments of Nigeria and other organizations have taken actions which have
made positive impact in the field of management education. One of the
outstanding resu l t s was the establishment of the Nigerian Council for
Management Education and Training in January, 1972, with the follow-
ing t e rms of re fe rence (17, p. 98): (1) to formulate and execute policy
on management education, training, and development at the pre-
employment and employment levels, in the c lassrooms and on the jobs;
(2) to co-ordinate and obtain agreement concerning programs of man-
agement education and training; including their subject, location,
standard, capacity, frequency, duration, type, and cost; (3) to main-
tain an up-to-date reg is te r of all available programs and ensure
adequate publicity and utilization of these programs; (4) to provide a
means of exchanging relevant information and ideas on t rends in man-
agement education and training and to ensure that the government more
fully understands the problems of management in Nigeria; (5) to initiate
and sponsor management programs and activities especially in these
a reas not adequately covered; and (6) to act as the governing council of
the Center for Management Development.
The council is a policy-making body responsible to the Ministry
of Economic Development and Reconstruction. It has an operational
a rm , the Center for Management Development (17, p. 99) which imple-
ments its policies. Strategic offsprings of the council and the center
a r e the Industrial Training Fund and the Nigerian Enterpr i ses Promo-
tion Decree (27, p. 79). The Industrial Training Fund Decree is an
ingenious device for promoting manpower development in the private
sector enterpr ises affected by it. Companies employing twenty-five
persons and over a re made to contribute to the fund 2 percent of their
payroll expenses annually. If they car ry out approved manpower
training programs within the year, they automatically recover their
contribution from the training fund. In so doing, these companies are
pushed to develop their managers and consequently improve efficiency
and effectiveness as well as to recover their contribution. The Nige-
rian Enterprises Promotion Decree on the other hand is designed to
increase the number of businesses owned by Nigerians and the number
of indigenous managers in all businesses in Nigeria.
A s a result of these legislations, a good amount of progress
has been made in management education, "in service" training for
managers has been extensively used by government, public corpo-
rations, and commercial concerns in Nigeria. Sometimes this sort of
training is used to prepare Nigerians for taking over from expatriates;
other times it precedes promotions (28, p. 305). There has also been
a tremendous increase in the number of management development
seminars and short courses. This progress in management develop-
ment has occurred primarily in the non-banking establishments.
These establishments knew the importance of such an activity and,
therefore, made commitments to establish internal training depart-
ments. Banking tended to neglect this area because the banking
environment was earlier more stable and devoid of the type of severe
competition that exists today.
The banking industry is very vital to the economic development
of any nation. In money terms, it turns over savings of individuals to
entrepreneurs who in turn invest them into productive ventures. For
savings and subsequent economic growth to take place, a society must
have a certain measure of affluence. Nigeria is Afr ica ' s wealthiest
nation with an annual oil revenue of some $7. 5 billion (27, p. 9) avail-
able for underwriting massive inf ra -s t ruc tura l , industrial, and
agricul tural development programs. The third National Development
Plan, funded by vast oil r e s e r v e s , envisages the expenditure of $50
billion (27, p. 8). Consumer appetites and spending power a re staying
ahead of the supply of goods. In fact, the government recently acceded
to union demands for increasing the minimum wage to $190 a month
(14, p. 15). Thus, savings a re bound to increase substantially, and
the banks should be able to harness this liquidity.
The banking system was developed in the 1950's and early
1960's and provided for the growing volume of usual commercial and
financial t ransactions (26, p. 309). The foreign-owned commercial
banks were most active in credit decisions and were pr imari ly oriented
toward serving the needs of the foreign business community (26, p. 312).
The central bank of Nigeria was set up in 1958. Its original powers
included the right to issue currency, to buy, sel l and rediscount
t r easury bills and other government secur i t ies . It had the right to
deal in commercial bills and crop bills as lenders of last r e so r t and
to buy and sel l foreign exchange. It also had the authority to establish
and enforce liquidity rat io requirements and to vary the discount r a t e
8
(26, p. 312). In 1968, power was conferred on the central bank to
prescr ibe minimum ra t ios of credit which each bank should extend to
indigenous borrowers (29, p. 70). By 1974, approximately half the
credit provided by foreign-owned banks went to Nigerians (29, p. 70).
The latest of the banking acts is the "Rural Banking Scheme. "
Under Phase II of this scheme, commercial banks in Nigeria a re to
open up 260 new branches in the r u r a l a reas by the end of 1983. One
hundred and ninety-eight branches were opened up under Phase I of the
scheme. By the t ime this second phase is completed in 1983, it is
estimated that there will be 20 commercial banks with about 1, 000
branches (23, p. 1736). Although this compulsory branching of banks
complicated the banking environment, it is a necessary move to
fur ther the economic development of the country. When the cr i t ical
social conditions a r e allowed to run unattended, government will take
a regulatory posture and invade the private sector to apply the r e -
sources previously withheld (15, p. 62). The banks would not other-
wise have opened up branches in the r u r a l a reas where they will face
very bad profit squeeze at least in the beginning. This government
action will enable the 70 percent of Nigerians who live in the r u r a l
a reas to participate in the economic activity of the country.
In 1977, the Nigerian Federa l government promulgated the
Enterpr i ses Promotion Decree. This decree created three c lasses of
en terpr i ses . The commercial banks were included in the second
category where Nigerians must hold majority interest (27, p. 79).
The law also demands that the majority of management be Nigerian.
It is clear that the last two government acts have worsened
Nigeria's position on its bank manpower requirements. Apart f rom
the need for more trained manpower, the rura l banking scheme has
necessitated a re-evaluation of the present Nigerian bank organization
design and management system for its fitness to meet the require-
ments of a highly geographically-decentralized industry. The common
trend in Nigeria is toward "over-centralization of authority inspired
by sheer love for povfcer" (29, p. 270). The post-civil war trend ac-
cording to Adedeji, the Nigerian economic development commissioner
in 1970, "has been toward increased centralization of control and
deepening of the bureaucratization process" (29, p. 271). The cen-
tralization is stronger in the banking industry where control naturally
seemed to be necessary.
One management technique that seems capable of containing
such labyrinthine branch banking structure is Managerial Decentrali-
zation. Allen defines decentralization as the systematic effort to
delegate to the lowest levels all authority except that which can only be
made at central points (1, 1. 162). The reference to central points
r e f e r s to the fact that decentralization is feasible when the delegated
decision responsibilities do not have an impact on departmental sub-
10
systems in the organization other than those under the jurisdiction of
the manager making the decision.
The classical organization principles introduced by Weber and
Fayol can no longer be generalized to ail organizational conditions for
they resul t in s t ructures that a re too static, too rigid, and too limiting
to creativity and individual commitment. Classical theory emphasizes
that design resul t s f rom application of abstract principles constituted
of discrete , rat ional concepts which, when properly applied, will resul t
in an order ly s t ructure (8, p. 384). The diversity and complexity
existing in most organizations today ra ther lend themselves to design
principles contingent upon the variables present in both internal and
external environment. In his book Management; Concepts and Situations,
Carl is le (8, p. 385) quotes Burns and Stalker as saying that . the
beginning of administrative wisdom is the awareness that there is no
one optimum type of management system. " John Child (9, p. 12) cited
the conclusion Duncan reached f rom his r e sea rch : "the degree of
variability in environments is a more important contributor to uncer-
tainty among managerial decis ion-makers than is the degree of
complexity. "
The banking industry has long been looked upon as one with
stable environment and therefore amenable to design principles that
were necessary for stability and control (20, p. 62). Norman Collins
(10) says that the very nature of the banker 's job, for example that of
11
the loan off icer , may sometimes seem to work against delegation, it is
a job in which the penalties for poor judgment a re inevitable and harsh .
The necessity for adequate compliance to the plethora of government
regulations probably gave evidence for this appearance. Today, how-
ever, the banking environment can no longer be looked upon as stable.
"The age of change in banking has come about rapidly and unexpectedly,
bringing with it a complexity of new services , broader competition,
increases in bank size, expansion of market a reas and the demands for
consumer movement" (20, p. 26). To add to the preceeding environ-
mental demands, the Nigerian banks face more unique conditions: the
semi-government ownership and consequent stultifying requirements ,
the compulsory branching into the r u r a l a reas to aid economic develop-
ment and to check against an impending "s tas is" or class war; the
necessity for bank management education. These a re additional reasons
why the Nigerian bank organizations must use an open management sys -
tem adaptive to the numerous environmental var iables . While the
bureaucrat ic or organizational and managerial shortcomings may not
be inordinately severe for ordinary government affa i rs handled by the
Nigerian civil serv ices , these shortcomings a re acute in running large,
geographically decentralized, modern and complex, profit-making bank
enterpr ises (29, p. 269).
Most of the resea rch on organization s t ructure has centered on
the manufacturing business. According to P. F . Drucker (12, p. 47),
12
"today we face the challenge of organizing the large financial business,
universit ies, hospitals and other non-manufacturing institutions.
These a re increasingly the t rue center of gravity of any developed econ-
omy. They employ the most people and contribute to and take the
largest share of the gross national product. They represent the funda-
mental organization problems today. They differ f rom the manufacturing
institutions in many ways among which is that "knowledge work" and
"knowledge workers" a re the core employees. Drucker (12) goes on to
suggest that simulated decentralization may be a good design solution
for the big banks. The complex branch banking situation in Nigeria
makes managerial decentralization a necessity. Managerial decentral i -
zation will be beneficial in the following ways (12, p. 49):
- Widest variety of services will be rendered;
- Greatest knowledge of and interest in local conditions;
- Job satisfaction and maximum motivation;
- Facilitated management training and development;
- Time saving f rom not r e fe r r ing most decisions to main off ice;
- Effectiveness of the branches, thus local development.
It is academically important that the investigation be car r ied
out to study the state of the art of managerial decentralization in the
Nigerian banks. This aspect of the finding will enable us to discover
whether Nigerian managers a r e willing to delegate and accept respon-
13
sibility. It should affect the training methods of management educators
and t r a ine r s .
Perhaps the greatest determinant of the feasibility of decentral i -
zation is the availability of competency to properly discharge respons i -
bility. Education and training to provide this competency is , therefore ,
the nerve center of the decentralization effort . Since effective manage-
ment skill is not something people a re born with, a combination of
education and experiential activities to bring about these skills need to
be provided. Modern enterpr ise managerial deficiencies exist in
virtually ail under-developed economies and in fact a re a defining
character is t ic of under-development. It was for reasons as these that
Nigeria established the Council for Management Education and Training.
In a survey (17) used to evaluate the training programs in
Nigeria, it was pointed out that these programs in the colleges, com-
merc ia l institutes, and management development centers a re presented
under c lassroom conditions and are concerned with introducing course
members to new concepts and techniques. The cr i t ic ism leveled
against this practice is that as long as theory is isolated f rom practice,
so long will management education effort remain ineffective in pro-
moting efficiency in functioning systems. The survey showed that the
integration of theory and practice is better established in some com-
panies in the Lagos area than in the formal training establishments.
Banking, on the other hand, had tended to neglect this planned training
14
exercise because the banking business environment has been relatively
stable and did not demand this type of attention. In view of the En te r -
pr ises Promotion Decree and the Nigerian Rural Banking Scheme, the
banking sector may be the most in need of management education at
this t ime.
This study will help in the identification of bank management
development needs by means of soliciting the perceptions of in-house
bank managers and t r a ine r s . Hopefully, the revelation will help bank
management development executives, bank consultants, the management
training centers, and universities in the design of their training mater ia l s
and curr iculum.
Basic Assumptions
It was assumed that the bank officials were objective in their
reactions to the questions.
Delimitations
This resea rch endeavor is limited to four in-depth case studies.
Although the selection of the banks is based on strat if ied sampling,
caution should be exercised in generalizing the findings because of the
small sample size.
The boundary of this study includes only the Lagos metroplex
and Imo State, Nigeria. Generalization of the findings to other states
of Nigeria may not be advisable because of different cultural fac tors .
15
Specifically, the different authority systems and the more severe
scarci ty of well-trained manpower prevalent in most of the other states
and which is cri t ical to delegation and decentralization, may render the
findings of this study inappropriate in other s ta tes of Nigeria.
However, the r e sea rch instrument could be utilized in a wide
variety of geographic a reas as a separate analysis in conjunction with
an analysis of purely geographical and cultural differences. This ef-
fort may provide a basic foundation which can serve as a departure
point for a wide variety of more specific r e sea rch endeavors.
Definition of T e r m s
Managerial Decentralization r e f e r s to the systematic effort to delegate
to the lower levels all authority except that which can only be exercised
at central points (1, p. 162).
Delegation is the entrustment of responsibility and authority to another
and the creation of accountability for performance (1, p. 117).
Procedure for the Collection of Data
The study is concerned with both needs assessment and the
status of managerial decentralization in the selected Nigerian banks. It
i s an in-depth case study of four carefully selected banking establish-
ments . The group is comprised of one government owned bank, one
commercial bank with the full allowable foreign control, and two
indigenously owned commercial banks. Selection of the group was
16
done by (stratified sampling) listing the banks in each group on a
separate slip of paper and drawing the slips f rom a container.
A thorough review of the l i terature on managerial decentral i -
zation and management development was conducted. After this review,
an interview guide (see appendix) was prepared for use in the interview
process . The interview guide was designed specifically to get the
necessary information pertaining to the r e sea rch questions. The in-
terview guide was designed to allow some discretion on the part of the
interviewer. The interview guide was validated by a panel of three
experienced professors of management in the College of Business Ad-
ministrat ion at North Texas State University. A pilot study was
undertaken in three selected banks in Denton, Texas, to test the ef-
fectiveness of parts of the interview guide in seeking answers to the
r e sea rch question and to update the interview guide.
Interviews were held at the headquarter level of each of the
four banks and also at a branch of each of the banks to find out the
amount of autonomy allowed the branches. The total number of head-
quar ters and branch offices studied is eight. The headquarters a r e
located at Lagos, the national capital, and the branches studied a re
located at Imo State, Nigeria. In each banking establishment, in ter-
views were held with the president and six other managers at the
headquarters level. At the branch level, the general manager and two
17
assistant managers were interviewed. The total number of personnel
interviewed in the four headquarters and the four branches is forty.
Procedure for Presentation of Data
The data a re presented in a descriptive form. Tables, and
where necessary, percentages a re used as media for the presentation.
There a re four different case studies and the data for each bank a re
presented in the case study of that bank. There is a fifth and final
combinatorial study devoted to the comparison of the salient aspects
of the entire data.
Each case study is presented with the original six major r e -
search questions as the basic format for the presentation. The f i rs t
r e sea rch question and the data pertinent to it a re t reated f i r s t , then the
second resea rch question and its data a re t reated, and so on.
In each case study, the general information pertaining to the
background of the bank is presented f i r s t . The f i r s t r e sea rch question
is res ta ted . The table or tables presenting the data pertinent to the
r e sea rch question a re introduced. The data a re summarized and a
discussion, as appropriate, concludes the t reatment and presentation
of the r e sea rch question. The second r e sea rch question is res ta ted .
The table or tables a re introduced, summarized, discussed. The third,
fourth, fifth, and sixth r e sea rch questions, and their data a re t reated,
and presented in a like fashion.
18
Procedure for Development of the Model
F i r s t , there will be a detailed survey of the l i tera ture on mana-
gerial decentralization and management development. Second, an
analysis of the data f rom the interviews will be made. Based on the
above two, a recommendation of training programs for the development
of the necessary competencies for managerial decentralization will be
made. The model will not include detailed descriptions of the techniques
for the development of the competencies.
CHAPTER BIBLIOGRAPHY
1. Allen, Louis A . , Management and Organization, New York: McGraw-Hill Book Company, 1958.
2. Barnard, Chester I . , The Functions of the Executive, Boston: Harvard University P r e s s , 1968.
3. Barnett , John H . , Individual Goal and Organizational Objectives: A Study of Integration Mechanisms, Ann Arbor, Michigan: University of Michigan Institute of Research, 1970.
4. Baughn and Walker, The Bankers ' Handbook, Homewood, Illinois: Dow Jones - Irwin, Inc . , 1966.
5. Bennis, Warren, Organization Development: Its Nature, Origin and Prospects , San Francisco: Addison ^Wesley Publishing Company, 1969.
6. Ber l iner , W. M. and McLanney, W. J . , Management Pract ice and Training, Homewood, Illinois: Richard D. Irwin, Inc . , 1974.
7. Brink, V. Z . , Understanding Management Policy and Making It Work, New York: American Management Association, 1978.
8. Carl is le , Howard M. , Management Concepts and Situations, Chicago: Science Research Associates Inc . , 1976.
9. Child, John, "Managerial and Organizational Fac tors Associated with Company Performance, " Journal of Management Studies, Vol. 12, No. 1, (February, 1975).
10. Collins, Norman J . , "The Human Aspect of Bank Management, " Journal of Commercial Bank Lending, (September, 1974).
11. Creedon, Timothy, "The Thin Line Between Excellence and Medi-ocri ty, " Journal of Commercial Bank Lending, (September, 1974).
12. Drucker, Peter F . , "New Templates for Today's Organization, " Harvard Business Review, (January-February, 1974).
19
20
13. Gibson, J . L . , Ivancevich, J . M . , and Donnelley, J . H. J r . , Readings in Organizations, Dallas: Business Publications, Inc. , 1979.
14. "Growing Pains: Despite Oil Funds, Nigeria Faces Inflation P rob lems , " The Wall Street Journal, (September 26, 1980).
15. Harper , Michael N . , "At the State Bank of India, Social Responsi-bility at Work, " Burroughs Clearing House, Vol. 59, No. 1, (October, 1974).
16. Hill, Norman C. , "increasing Your Managerial Effectiveness, " Training and Development Journal, (July, 1977).
17. Iboko, John I . , "Management Development and its Developing Pat terns in Nigeria, " Management International Review, Vol. 16, No. 3, 1976.
18. Jackson, V. M. and Morgan, C. P . , Organization Theory, A P e r -spective for Management, Englewood, New Je rsey : Prent ice Hall, 1978.
19. Kafka and Schaefer, "What's Your Motivational Rat ing?" Training and Development, (October, 1977).
20. Kitka, J o h n M . , "The Growing Need for Bank Training, " Burroughs Clearing House, Vol. 59, No. 1, (October, 1974).
21. Miles, Raymond E . , Theories of Management: Implications for Organizational Behavior and Development, New York: McGraw-Hill, 1975.
22. Mohr, Nicholas, "Business Graduates Call for Changes in Manage-ment Education, " Accountancy, (May, 1979).
23. "More Commercial Banks ," West Africa, No. 3294, (September 8, 1980).
24. Morr i s , William T . , Decentralization in Management Systems, Ohio: Ohio State University P r e s s , 1968.
25. Nafziger, Wayne E . , African Capitalism: A Call Study in Nigerian Entrepreneur ship, Stanford, California: Hoover Institutes P r e s s , 1977.
21
26. Nelson, Harold D., et al, Area Handbook for Nigeria, Washington, D. C. : United States Printing Press , 1972.
27. Nigerian - American Economic Relations, Interecol International Economic Link Publishers, 1978.
28. Onyemelukwe, C. C. , Problems of Industrial Planning and Man-agement in Nigeria, New York: Columbia University Press . 1966.
29. Schatz, Sayre P . , Nigerian Capitalism, Berkeley: University of California Press , 1977.
30. Scott, W. G. and Mitchell, T. R . , Organization Theory, A Struc-tural and Behavioral Analysis, Illinois: Richard D. Irwin, Inc., 1976.
31. Simons, John, "Participatory Management at the World Bank, " Training and Development Journal, (March, 1980).
32. Smith, G. A. J r . , Managing Geographically Decentralized Com-panies, Boston: Harvard University Division of Research, 1958.
33. Selfridge, R. J . and Sokolik, S. L . , "A Comprehensive View of OD, " Michigan State University Business Topics, Winter, 1976.
34. Wapersky, Basil A. , Banking and Finance in Sierra Leone: A Developing Economy, Atlanta: Georgia"State College Re^ search, 1968.
CHAPTER II
REVIEW OF RELATED LITERATURE
This chapter is devoted to a review of the literature pertaining
to managerial decentralization. It takes a systems view of the subject.
This view leads to the division of the Literature into the following
sections: (1) the environment of the Nigerian banking sector; (2) o r -
ganization design: a contingency analysis; and (3) training for mana-
gerial decentralization.
The environment of the banking sector reviews the environ-
mental variables (e. g . , government regulations, competition, technology,
and so forth) that have significant impact on the bank organizations.
The section for "Organization Design: A Contingency Analysis" surveys
ways to bring about the needed congruence among organizational parts.
This will be done through the review of (1) individual-structure fit;
(2) task-structure fit; and (3) environment-structure fit. The third
and last section will review the literature related to management t rain-
ing and development as related to managerial decentralization.
The Environment of the Nigerian Banking Sector
Nigeria's newly found wealth and consequent rapid rate of indus-
trialization have accelerated the rate of change in environmental variables
22
23
(for instance, government regulations, economic growth, technology,
employee education, and values). Also, since the banking industry
uses a technology s imilar to Thompson's (43) mediating classification
which connects different users of a service, whatever affects the lives
and economics of these users will have a significant bearing on the
banking organization. To better understand the backdrop upon which
this study is undertaken, a brief examination of each factor or variable
will be made. These fac tors a re
1. Government regulations
2. Government equity participation and control
3. Competition
4. Technology
5. Geographical dispersion of s t ructure
6. The nature of the job
7. Sizes of the organizations
8. Purpose (goals) of the organizations
9. The employee situation
These a re individually t reated below.
Government Regulations
The rapid ra te of industrialization in Nigeria s tems almost ex-
clusively f rom the newly-found wealth in the country according to
Ogwuma (34, p. 11-22). There is a multiplicity of legislations and
24
these come, get amended, and sometimes fade away like a nova.
Government regulations and control a rose mainly f rom the collapse of
banks during the l a i s sez- fa i re period of the 1940's. The objective was
to regulate the operation of the banks in order to regain confidence in
them and safeguard the savings of depositors. Another objective was
to meet the need for the authorities to direct and control the application
of the resources of the banks to economic development.
Among the recent legislations which have great impact on the
banks are those described in the following paragraphs. These a re but
a few of the many and increasing number of regulations imposed on the
banking sector .
The enterpr ises promotion decree. —This decree which was
promulgated by the federa l government in 1977 sought to put the owner-
ship of the economy in the hands of Nigerians and to turn over much of
the operation (management) to Nigerians. As Ogwuma (34) indicated,
the objective was to more properly harness the activities of the banks
for national development. The most important s trategy for bringing
this about,he said, was the rais ing of indigenous equity participation in
ail expatriate banks to 60 percent, thus vesting control in Nigerians.
Following this was the indigenization of management which s tar ted in
1979 and was completed in 1980. This aspect of the decree will evi-
dently add s t ra in to the already meager bank management education
25
facil i t ies and programs and contribute to a severe scarci ty of compe-
tent personnel as Professor Nwankwo (31) has warned.
Par t of the Enterpr i ses Promotion Decree was amended early
this year to encourage foreign capital investment. Foreigners can now
hold minority interest up to 40 percent in some enterpr ises that were
former ly exclusively reserved for Nigerians. The participation of
foreigners has also been increased to 60 percent in some other enter-
pr ises where they were only former ly allowed to hold minority interest
(33, p. 332). Although this particular amendment is not directed at the
banking industry, the expanded business activities that will ensue will
have a great impact on the banks. In addition to the above effect, the
amendment at tests to the uncertainty and variability in the banking en-
vironment with regard to government regulations as a fac tor .
The r u r a l banking program. - -Since 1978 the government has
been compelling the banks to open up branches in the r u r a l a reas ac ross
the country. The government has a noble motive. According to the
governor of Ogun state, Bisi Onabanjo (35, p. 11), " . . . if the ra te of
social and economic development is to be accelerated significantly in
the r u r a l a reas which form the base for national growth, people in
these a reas must be made to feel the impact and enjoy in full , the
benefits of banks and banking services . " This noble motive, however,
may not contribute to the efficient management of the stockholders '
26
money. His re tu rn on investment is diluted in the name of social
justice and development expediency.
Loan quota and interest ra te stipulations. - -Other recent regu-
lations include (1) the federal legislation of the percentage of each
bank's loans to targeted sectors of the economy (45, p. 77); (2) the dis-
criminatory legislation against banks of a specific r a t e of re turn above
which a surcharge is levied on the bank (45, p. 77); and (3) the decrease
of interest r a t e on loans to such sectors as agriculture and resident ia l
construction (34, p. 22).
Government Equity Participation and Control
In 1973, the federal government acquired 40 percent of the
equity of each of the three largest expatriate banks in Nigeria, thereby
ensuring more involvement in the policy making process of the banks
(45, p. 17). The banks affected were Union Bank, F i r s t Bank, and
United Bank for Afr ica (34, p. 11). Government ownership of interests
in the banks, and consequently government control, has since grown
enormously. According to Ogwuma (34, p. 11) Federa l and State
governments now appoint d i rectors in twenty-three out of twenty-six
commercial and merchant banks, controlling in the process about 98
percent of the r e sources of all banks. Through the Central Bank,
government decides on the ra te of interest payable to depositors and
chargeable to borrowers ; it directs the location of banks and when for
27
economic reasons a bank selects a iocation, the government has a veto
power (34, p. 11). The equity participation of the federa l and state
governments is a very serious countervailing factor to efficient bank
management in Nigeria. According to Professor Nwankwo (31, p. 441),
the state banks a re vulnerable to political manipulation. The expe-
r ience in Nigeria is that government participation breeds bureaucracy,
corruption, and nepotism. Referr ing to public sector organizations,
Adedeji (39, p. 211), the Nigerian economic development commissioner
in 1970, stated . . the past civil war trend has been towards increased
centralization of control and deepening of the bureaucratization process . "
The fear is that this bureaucrat ic character is t ic of the public sector
organizations may be inherited by the banking sector f r om such a heavy
interaction with government.
Traditionally, organizations attempted to increase their degree
of influence over the external variable labeled "government" through
lobbying and financial contributions to political part ies in an effort to
influence legislations. These techniques a re increasingly proving in-
effective (40, p. 26). It will require the ingenuity of the managers of
the system to devise more sophisticated techniques in dealing with this
sector of the external environment because the degree of government
interference is Likely to expand (40, p. 26). It may be advisable that
the banks take a pro-active orientation in dealing with this variable.
28
Competition
As incomes grow, more banking facil i t ies will be needed.
According to Vincent (46, p. 250), the services demanded of the bank-
ing industry will grow more sophisticated in the 1980's in response to
changes in the nature of the business they a re called upon to per form.
Their abilities will also be taxed as their customers become more
knowledgeable and discriminating. This will requi re a lot of creativity
f r om the managers of the system. Competition will lead to new s e r -
vices, unique promotions, sophisticated applications of technology,
and hopefully total organizational commitments. The complexity and
uncertainty in the future a re contributing to marketing and business
development programs and concepts in the banking industry (25, p. 122).
The fact that changes are taking place is a positive reaction and tes t i -
mony to the dynamism of banking in Nigeria. Competition will lead to
cr i t ical t ime f r a m e for decisions. When the decision requ i res on-the-
spot t reatment , the authority to make them should be delegated (9,
p. 398). In the same vein, divisions that a re closest to the customers
have a better knowledge of local conditions and often have quicker and
better reactions to the needs of their markets .
In the more developed countries of the world, conglomeration
and ver t ical integration have been the most successful s t ra tegies for
dealing with the external variable called "competi tors" (40, p. 26).
29
Plain diseconomies of scale caused by swifts and excessive growth
(acquisitions, takeovers, mergers , and so forth) are rendering these
devices impotent (40, p. 26). Thus, the organization must seek a new
elixir for this condition.
Technology
The use of advanced business equipments has grown quite pop-
ular in the Nigerian financial institutions and will become a staple item
with the increasing sophistication of the banking system (32, p. 61).
As these institutions grow, they seek improvements in operating ef-
ficiency and in productivity. According to a market research study
undertaken for 3rd World MicroSystems, a recently organized private
venture in Lagos, Nigeria, half a million businesses and organizations
in Nigeria would benefit f rom using a micro-computer system (22, p.
39). As of 1975, officers of the financial institutions placed procure-
ment orders for such equipments as computers and related equipments,
accounting and bookkeeping equipments, micrographic systems and
supplies, electronic calculators, and advanced data storage and r e -
trieval equipments (32, p. 61). Most of these equipments are in regular
use in Nigeria. Computers, however, are still relatively uncommon.
In 1974, only two of the then sixteen commercial banks and the six
largest insurance companies operated their own computer systems.
Others did their processing at their parent companies or had accounts with
30
major computer-processing f i r m s (32, p. 59). In 1975, United Bank
for Afr ica had the most sophisticated computer hardware system in
the Nigerian banking community. It owned a centralized IBM computer
system as well as Burroughs mini-computers tailored for each branch
office.
The situation has changed dramatically since 1975. With the
rapidly increasing volume of financial t ransact ions, there has been a
growing trend towards more sophisticated equipments (32, p. 59).
This trend will get more explosive as corporate t r e a s u r e r s and con-
sumers become increasingly sensitive to the costs and benefits
associated with financial services (16, p. 25). Automation of admini-
strat ive office functions and of the customer interface is in the forecas t .
With the geographical decentralization of the branch banks, a good
management information system is imperative. If this is not taken
seriously, the cost of operating the already non-economical r u r a l
banks will drain the profit made in the s trategic locations. Electronic
systems technology is a powerful competitive weapon leading to pro-
ductivity improvements and declining cost per transaction in financial
services (16, p. 25). Those institutions that a re not getting involved
in the office automation environments will be forced to play a very
f rus t ra t ing catch-up game in the future or could even be forced out of
the market (11, p. 52). Office automation equipment using modern
31
technology will usher in changes in the ways managers accomplish
their missions, thereby increasing productivity (11, p. 51).
Geographical Dispersion of the Structure
By the end of December 1983, there will be 1000 commercial
banks in Nigeria belonging to only 20 commercial bank organizations:
a ratio of 50 bank offices to one parent company (46, p. 286). The
physical decentralization of commercial banks has been traditional in
Nigeria. This was probably inherited f rom the Brit ish colonial p res -
ence in Nigeria. In 1963, there were 13 banks and 196 branches. In
1974 this number increased to 16 commercial banks and 387 branches
(32, p. 59). Presently, there a re 20 banks with approximately 700
branches (46, p. 286). The dramatic increase in the number of
branches is the resul t of the f i r s t phase of the national r u r a l banking
program which started in 1978 and ended in June 1980, and in which
200 branches allocated to existing banks were opened (46, p. 286).
The second phase of the program, which star ted on the f i r s t of August
1980 and will be completed in December 1983 (31, p. 441), will witness
the opening of another 260 r u r a l branches (46, p. 286). The large num-
ber of branches represen ts a great managerial colossus for each bank
organization. According to Carl is le (9, p. 398), the more dispersed
the physical s t ruc tures , the more difficult it is for a central individual
to have the knowledge of local conditions. The availability of this
32
knowledge or informat ion is a p re requ is i t e for decis ion-making. Ca re
must be taken to organize the s t ruc tu re into organic a r r angemen t s to
ensure efficient operat ion. United Bank for Af r i ca , for instance, may
have a na tura l tendency to bureaucra t i ze if painstaking effor t is not
made to provide workable design a r r angemen t s . Whether o r not those
banks decent ra l ize the management function is an important fac tor that
could spel l the success or demise of each bank. The decentra l iza t ion
t rend has recen t ly s ta r ted in the Niger ian banks but it is s t i l l at p r i m i -
t ive levels . In fact , on January 2, 1981, the management of the
F e d e r a l Mortgage Bank announced i ts decision to decent ra l ize some
duties which had been central ized (29, p. 16). Under the f o r m e r a r -
rangement a r ea of f ices in distant a r e a s of the country could only
r ecommend cus tomers for loans; the approval was at the d iscre t ion of
the headquar t e r s in Lagos . The a r e a of f ices can now grant loans not
exceeding N 65,000 (approximately $122,000) to cus tomers without
r e f e r e n c e to the headquar t e r s (29, p. 16). In addition to the delegation
of the loan authori ty, branch manage r s can now employ people on posts
not exceeding s a l a r y level grade four , while a r e a m a n a g e r s can r e c r u i t
staff up to level seven. Those additions were not f o r m e r l y possible
(29, p. 16). Due to the physical decentra l iza t ion and the competit ive
c l imate , it i s nece s sa ry that the banks decent ra l ize a good number of
authori ty and decision a r e a s to make the branches economically p ro-
f i table .
33
The Nature of the Job
It is probably to be expected that there is a higher r i sk involved
in such banking activities as lending in the developing countries than
one would find in developed countries. This is ra ther a phenomenon of
underdevelopment and poverty. The majori ty of the businessmen, par-
t icularly the smal ler scale businessmen, a re uneducated and have little
or no experience in the proper methods of business management (39).
For this reason, there is more r i sk involved in small business loans.
The tendency, as a resul t of this, is towards a more controlled s t ruc -
ture for lending operations. In Task and Organization (27), Miller and
Scott quote Woodward, who points out that carefully constructed control
systems may be able to decrease somewhat the uncertainty associated
with the task system. The very nature of the banker 's job, for example
that of the loan off icer , may sometimes seem to work against dele-
gation and autonomous work group designs: it a job in which the
penalties for poor judgment a re inevitable and harsh (13, p. 12). How-
ever, uncertainty may tend to increase the salience of the individual
task and eventuate it into a more task-centered, problem-solving
nature than towards routine performance (27, p. 110). When tasks a r e
problem-solving oriented and deal with degrees of exceptions, their
organizations should be s tructured as organic problem-solving sys -
tems ra ther than mechanistic performance systems (27, p. 110).
34
The Scale or Size of the Structure
The size of ail organization will make a difference in the way it
is managed. Nigerian banks a re of large size and employ a great
number of people. Union Bank for instance had a workforce of 2, 600
people in its 90 branches in 1974 (32). Today, it has about 123 branches
(46, p. 286) and its workforce has remarkably increased. The head
office of the Nigerian bank is a large organization in its own right. It
needs a lot of skill to manage. In large organizations, top executives
do not have the time or knowledge to make all necessary decisions.
They are forced to decentralize the decision-making functions (9, p.
288). As organizations grow, the cadre of specialists grows (18, p.
74), the need for more effective information system grows (40, p. 142),
and the need for more calculated management effort grows. As Alfred
P . Sloan, J r . , fo rmer President of General Motors Corporation, de-
clared over thirty years ago in explanation of the problems of bigness,
"in practically all our activities we seem to suffer f rom the inertia r e -
sulting f rom our great size . . . sometimes I am almost forced to the
conclusion that General Motors is so large and its inertia so great that
it is impossible for us to be leaders . " (9, p. 679) Creativity and
ingenuity are needed in designing workable arrangements for very large
organizations. Larger organizations may also tend to assign their
greater numbers of employees to more specialized ro les within their
various departments and delegate decisions to the lower levels (12,
35
p. 19). Therefore as institutions grow, their structures have to be
developed towards the models which characterize large units for cost
reduction, information dissemination, and better coordination and
control. Without information there can be no decision-making or con-
trol (40, p. 142).
Purpose and Goals of the Organizations
In deciding where any key business function can best be per-
formed, Smith (43, p. 35) pointed out that perhaps the economic factor
should have the most weight on the decision process. The validity of
this statement depends on the purpose and objectives of the organi-
zation. If the purpose and goals of the organization are economic,
generally it is structured to maximize efficiency in the use and produc-
tion of resources . If the goals are political, the organization is less
concerned with efficiency and more concerned with social, cultural,
and political values, and structures may seek to maximize democracy,
participation, and special interests (9, p. 390). There is more in-
volved in the present Nigerian banking system than the simplistic profit
motive and its obsession with efficiency and competition. The sectoral
allocation of loans, the levy on excess profit, the rura l banking program,
the indigenzation decree, government ownership of interest and it 's
participation in the policy formulation and in the decision processes (34)
are but indications of social, cultural, and political goals and objectives.
36
The point here is not that economic expediency and efficiency should be
ignored in s t ructural designs when the goals and objectives of organi-
zations are not str ict ly profit oriented. According to Smith (42, p. 35),
any design for organizations, whether fully or only partly profit oriented,
that does not take into cognizance the basic economic and competitive
factors is bound to result in inefficiency. All pertinent external and
internal fac tors , including the purpose and goals of organizations should
be considered in s t ructural design.
The Employee Situation
According to Ola Vincent (46, p. 251), success of the banking
sector in the 1980's will very largely depend on increased supply of
trained and experienced personnel in this crucial sector . The existing
individual training arrangements will have to be supplemented by col-
lective efforts if the desired personnel a re to be produced quickly and
in the desired quality and quantity. Presently, there a re a shortage of
well-trained bank managers and specialists and a scarci ty of the t r a in -
ing programs and methods. Where the training programs and facil i t ies
do exist, the banks a re not employing them to their full advantage. In
a survey (17), conducted by the Center for Management Development, of
management development and training needs designed to highlight those
managerial functions in which Nigerian managers and supervisors were
weak and need remedial development efforts , personnel management,
37
financial management, supervision, motivation, and problem-solving
areas were identified. It was also found that enterprises which devoted
at least three days a year for job training for each member of the per-
sonnel had higher performance ratings than others.
The average employee of the bank organization is an educated
white collar member of the middle class. Drucker (18, p. 74) is of
the opinion that with increase in the size of organizations, the possi-
bility of a large size of specialists is imminent. The growth in the
number of specialists may be in such areas as tax accountants, marked
analysis, product and market managers, economists, computer spe-
cialists, construction and rea l estate loan specialists, investment
experts, management development specialists. This new middle mana-
ger is a supplier of knowledge and has communication and responsi-
bility sideways and upwards. Technology has increased the complexity
of tasks and functions and ushered in a new reliance on knowledge-
based influence. Carlisle (9, p. 398) indicates that the hierarchy of
today's organization is based less on knowledge than organizations of
fifty years ago. This group of what Drucker (18, p. 271) calls "know-
ledge workers" need autonomy and professional respect in carrying
out their obligations.
38
Organization Design: A Contingency Analysis
Within the last two decades, r e s e a r c h e r s have given consid-
erable attention to decentralization and the general view of contingency
approach to organization design and management (20, pp. 69-81).
Four sets of factors in organizations which have been under consid-
erable exploration by management experts according to Ford and
Nemiroff (20, p. 69), a re : (1) the nature of the task (e. g. repeti t ive
and simple versus skillful and complex); (2) the nature of the individual
(values, needs, education); (3) organization s t ructure (mechanistic
versus organic); and (4) the nature of the environment (complex versus
simple). The understanding of the nature of interactions among these
variables is crit ically important for organization design. The greater
the congruence among these variables, the greater the task effective-
ness and human fulfi lment.
The Individual-Structure Fit
Lately, it has finally been accepted that management has two
major functions - that of securing the common economic purpose of
the organization and that of governing organizations in such a way that
individuals, through contributingtheir services to organizational objec-
t ives, obtain personal satisfaction that make them willing to cooperate
(2, p. 1). That this goal has continued to be an issue of concern is
suggested by Barre t t (2, p. 1) in his quote of Chris Argyris: . .How
39
is it possible to create an organization in which the individual may ob-
tain optimum expression, and simultaneously, in which the organization
itself may obtain optimum satisfaction of its demands?" Some author-
ities see this problem as that of integrating individual needs and
organizational objectives, and participative management is seen as the
panacea (28, p. 40). Ford and Nemiroff (20, p. 73) introduce Vroom's
opinion in this mat te r . Vroom disagrees with the general use of par-
ticipation or managerial decentralization as a be-a l l -e l ix i r . He
supports the contingency idea by demonstrating that more decentral i -
zation of decision-making or participation is not necessar i ly beneficial.
Rather, he goes on to say that the relationship between participation
and job satisfaction is contingent upon certain employee personality
t ra i t s , and employee location in organization h ierarchy. This view is
supported by Carl is le and Shetry (10, p. 44) suggesting that a major
contribution to organizational effectiveness will derive f rom adapting
the s t ructure to accommodate properly to psychological needs or o r -
ganizational members .
Carl is le and Shetry cite other wri ters including Chris Argyris
and Freder ick Herzberg who have drawn attention to the conflict which
is imminent between a traditional definition of formal organization
s t ructure and the needs of psychologically mature individuals. They
agree that for proper design of organizations, it is imperative that a
number of forces affecting employee behavior and performance be con-
40
sidered. These forces include: the level of employee education, skill,
des i re for independence, need for achievement, motivation for assuming
responsibili ty and so forth; these should greatly influence organization
s t ructure . Ford and Nemiroff (20, p. 73) cited a study by Vroom which
concluded that whereas the opportunity to participate in decision-making
did not affect authoritarians and people with weak independence needs,
equalitarians and people with strong independence needs responded
with positive job attitudes, and a tendency towards increased production.
A controlled laboratory study by Rucker and King was also cited by
Ford and Nemiroff, in brief, it states that " . . . manipulative leader-
ship is not always less , and may even be more effective than part ici-
pative leadership when subordinates a re low in ascendance and/or high
in external i ty ." Suggesting a s imilar idea, another study (10, pp. 38-
45) indicates that compared to unskilled workers, skilled workers and
professional personnel a re more committed to their jobs and have a
stronger desire for autonomy and for participation in decision-making.
Attention should also be given to Drucker ' s concepts of "know-
ledge organization" and "knowledge workers" (18, p. 74). He speaks
of the growth in the number of the knowledge professionals and points
to the banking industry as one of the a reas where this growth has oc-
curred. This new breed of managers , because of their education and
sophistication a re emerging with new values orientations. Thus "we
a re moving f rom individualism to individual fulfilment through part ici-
41
pation in an organic socia l p rocess , and f r o m scient i f ic special izat ion
and f ragmenta t ion to a perception of whole s y s t e m s , not just the i r
components" (7, pp. 15-23). In the business organizat ions , the ba t t le -
ground for the new emerging values and the older one is the dyad of the
younger employee (manager) and the older manager ( super ior ) . A
meet ing of minds can be achieved through a f r e e flow of communication
about va lues . Employees a r e somet imes influenced by the charac te r of
l eadersh ip m o r e than by the essence of a m a n a g e r ' s conclusions.
F r i ed lander (20, p. 73) suggested that congruence between life
s ty les (values) and organizat ion s t ruc tu r e have a favorable impact on
job sa t i s fac t ion . Vinton's r e s e a r c h in an educational set t ing supported
this view. He found that the c loser the match between a s tudent ' s l ife
s tyle or ientat ion and the c l a s s room s t ruc tu re , the g rea t e r would be the
individual 's fulf i lment (20, p. 75). A recent study in Niger ia by
Celest ine Nwachukwu (30, pp. 6-12) also supported this contention that
organizat ional cha rac t e r i s t i c s a r e re la ted to job sa t i s fac t ion . In the
study, f emale manage r s in m o r e organic set t ings were more sa t i s f ied
with thei r jobs, the organizat ional levels and sa l a ry sca le notwithstand-
ing. Two outstanding studies done on pe r fo rmance and sa t i s fac t ion of
bank manage r s - that of McAlis ter and O v e r s t r e e t (24, pp. 213-217),
and that of Euske , Jackson and Reif (19, pp. 36-42), have revea led in-
t e r e s t i ng findings s imi l a r to the r e s u l t s obtained by other r e s e a r c h e r s .
The i r work found that in o rde r to inc rease pe r fo rmance and sa t i s fac t ion
42
in the bank setting, decentralization is a necessity. Supervisory
leadership style is a key variable affecting both job satisfaction and
performance. Regional managers must create a work situation in
which branch managers perceive themselves as being in the "locus-of-
control" of the factors that affect their success or fa i lures (19, p. 38).
The effective alignment of the elements of the organization to
bring about the needed congruence does not come about with the
individual-structure fit alone. Task-s t ruc ture fit also has an important
bearing on the ability of the organization to ca r ry out its objectives.
The Task-Structure Fit
In the classic management era when 'technical nationality' was
the common denominator in industrial organizations, the most appro-
priate organization for any enterpr ise was that giving a best fit to
pr imary task performance (27, p. 111). According to Mitchell and
Scott (28, p. 308), the goals and objectives of organizations have grown
beyond the accomplishment of tasks . Present ly included in the concerns
of organizations is the personal fulfilment and satisfaction of its mem-
bers . Since task performance is perhaps the ra ison d 'e t re of organi-
zations, it is to be expected that it will have some effect on the mode of
organizing (9, p. 391). J . D. Thompson in his publication Organiza-
tions Action (43) r e f e r r ed to the assumptions about tasks implicit
in known models of organization s t ructure . Scientific management type
43
theor ies , he said, operate on the view that tasks a re routinizable and
repetit ive; administrative management models presume tasks which
a re amenable to specialization and departmental grouping. Comtem-
porary interest in task phenomena have not been lacking, examples a re
Rice and the Tavistock groupv 1967 (38); and Thompson, 1967 (43). Task
considerations were also r i fe in works of technology and organizations:
Woodward, Perrow, Burns and Stalker, Lawrence and Lorsh (20).
"it should be borne in mind that tasks per se and the technology
which facil i tates them are like control systems, to a degree separable "
(27, p. 107). Perceptions of the nature of task will depend heavily on
the technological perspective brought to bear upon it. Technological
facility can work l i teral reconstruction of a task. For example, the
availability of computing machines and the computer have changed the
perceptions and the nature of the tasks of bankers and insurance com-
panies via total systems information processing, memory storage and
re t r i eva l capacities. This effect was also evident in the application of
technology in the Tavistock studies (38). Tasks can therefore directly,
or indirectly through technology, affect organization s t ructure in so far
as they determine the technology used in their accomplishment.
Ford and Nemiroff (20, p. 71) cited Lawrence 's study which
found task performance to be contingent upon congruence between task
demands and communication networks employed. When work is routine
and simple, a more centralized, h ierarchia l and controlling s t ructure
44
facilitates effective task performance. When, on the other hand, work is
complex, a less rigid, lateral information sharing structure maximizes
performance (20, p. 71). The accuracy of the results of the above r e -
search on small groups have been confirmed by empirical studies on
large organizations. Included in these macro-studies are that of Burns
and Stalker, and the seminal studies performed by Joan Woodward in
south England (2). Also supporting this is Perrow's study discussed by
Ford and Nemiroff (20). It is found that in enterprises where tasks are
non-uniform and involved a large number of exceptions, discretionary
authority is delegated downwards. When the converse is true, such
authority is maintained at higher organizational levels.
This finding is supported by the conceptual view that each and
any organization can be placed somewhere on the performance-problem
solving continuum. The more performance oriented, that is the more
simple, repetitive, routinizable or programmable the tasks of an or -
ganization, the more rigid and mechanistic the structure. When the
system deals with exceptions, problem solving,and tasks that are un-
programmabie and changeful, a more organic and adaptive structure is
more fitting (27, p. 110). The former may be epitomized by the mass
production factory, and the later by the research organizations and
automated oil refinery. In the later kind of organizations, the system
deals with exceptions and problem solving and priorities may change.
! f
45
The banking industry for instance, may change its priori ty f rom in-
vestment in government securi t ies to concentration on the Loan market
as a resul t of change in the economy.
Pe r row ' s conclusion has been aff i rmed by many later studies.
Fr ied iander ' s finding discussed in Academy of Management Review (20,
pp. 69-81), is one of these. It states that the better the fit between task
character is t ics and organization s t ructure , the greater the task per-
formance. For instance, when the task is "unstructured, " "ill-defined,
and "novel ," and requ i res examination of probable al ternatives, then
the proper alignment for maximum effectiveness involves authority
which is vested in expert ise ra ther than authority solely f rom upper
levels in the hierarchy. Others discussed a re Hrebiniak's finding of
significant relationships between dimensions of job technology and
s t ructure , and Van de Van and Delbecq's disclosure that work unit
s t ructure is related to the complexity and variability of the task. O r -
ganizational effectiveness then should flow f rom what Kenneth Rice (38,
p. 274) called "task fitted organization. "
No mat ter how well organizations achieve the individual-structure
fit and the t ask-s t ruc tu re fit , their ability to remain viable enterpr ises
will depend on their ability to adapt to their changing environments.
46
The Environment-Struct are Fit
The environments of organizations have grown dramatically
complex in recent years . The more complex a system, the more diffi-
cult it is to predict its behavior (40). One may ask, "how can this
uncertainty be reduced?" Schoderbek and Kefalas say it is through in-
formation and the idea of "requisite variety" (40, p. 76). "information
extinguishes variety and the reduction of variety is one of the techniques
of control. "
The central theme of organizational contingency theory is that
changing dynamic environments call for organic, adaptive s t ructures
for the organization to be successful (9, p. 393). The f i rs t source of
uncertainty in the environment can be the s t ructure of the marketplace.
The variability of change in the product lines, the number of competi-
tive products, manufacturers , and price ranges can all lead to market
uncertainty. There is a multiplicity of new services offered by the
banks. The quality and quantity of these new services have created
more competition in bank marketing and created its own share of un-
certainty.
Another source of uncertainty and volatility is the ra te of scien-
tif ic and technological innovation. Capabilities brought about by the
fast-evolving electronic systems technology are a major power in bring-
ing about fundamental s t ructura l changes in the financial services
industr ies . According to John Diebold (10, p. 25), writing for The
47
Bankers Magazine, he states that . .electronic systems technology
is a powerful competitive weapon leading to productivity improvements
and relatively declining costs per transaction in financial services. "
Social and political factors and structure can also be strong
sources of uncertainty in the business f i rm. As society has placed less
emphasis on authority and placed concern on the quality of living, o r -
ganizations have adjusted their internal functioning to reflect this (9,
p. 395). As political leaders pass laws about rura l banking and indige-
nization, these are equally reflected on the banking organizations.
John Child (12, p. 12) writes that the complexity of the environment is
said to be greater the more extensive and heterogenous are activities
outside the organization which are relevant to its planning and opera-
tions and which therefore constitute areas of information it should
monitor. Classifying organizations into mechanistic and organic sys-
tems according to the amount of uncertainty and complexity in the
external environment, Burns and Stalker found that mechanistic s t ruc-
tures were suited to enterprises operating under relatively stable
conditions and organic structures to organizations operating under
changing conditions (40, p. 184).
Each unit of an organization has as its concern the problem of
dealing with its own external environment. Units dealing with the cus-
tomers will be organized to meet with the uncertainty in that environment
and units dealing with internal processing of data should be organized to
48
suit i tself . In fact, recent studies have shown that the composition of
boards of di rectors is influenced by environmental p ressures (9, p.
394).
Training for Managerial Decentralization
Situational variables that make the banking environment in
Nigeria a complex one have been delineated. The landmark studies of
Euske, Jackson and Rief (19), and that of McAlister and Overs t ree t
(24), of bank management have unequivocally shown that decentral i-
zation of decision-making is imperative in the branch banking system.
Euske, Jackson and Rief ' s study showed that those branch managers
who perceived that they were in control of factors that affect their
success or fai lure achieved better performance and were more sa t i s -
fied with their jobs (19, p. 38). It was also found that branch managers
who perceived their supervisors (regional managers) as being very
supportive, setting and reinforcing high standards, and encouraging
independent thought and action were more satisfied with their work
situation.
This finding is supported by Per row 's r e sea rch discussed by
Ford and Nemiroff (20, p. 72), which showed that en te rp r i ses , where
tasks a re non-uniform and involved a large number of exceptions and
decisions, discret ionary authority is delegated downwards. Studies
that call for decentralization and organic organization s t ruc ture when
49
the organization environment is complex and changing are numerous.
Many of such studies have been identified in the preceding section of
this chapter. Studies that call for this type of organization structure in
the banking sector are equally numerous. One thing worthy of note is
that training must precede decentralization and delegation (5, p. 413).
It remains for the Nigerian banking sector to effectively train their
managers and employees in preparation for the decentralized organi-
zation.
The banking industry is a service-oriented industry in which
the employees of each bank play an important role in the success of
operations. Yet, despite the acknowledged importance of these em-
ployees, the importance of training them has largely been ignored.
The literature on supervisory management consistently holds to the
fact that f irst- l ine supervisors are key elements in any organization
(15, pp. 58-62). But very frequently supervisors are assigned to a
position of responsibility with absolutely no training or experience in
managing the most critical resource - people (15, p. 58). No basic
courses on motivation, leadership or supervisory methods are pro-
vided in most of the cases. Very frequently, supervisors do not com-
prehend that people are their most important resources . In the study
by McAlister and Overstreet (24), approximately 80 percent of the
managers included were found to be involved in the supervision of
other employees. Only few managers were directly involved with
50
technical tasks . But the irony of it is that most f i r s t - l ine supervisors
view the technical aspects of their jobs as more important than the
human relations aspect (15, p. 58). Many supervisors have been pro-
moted on the basis of their technical competency without any training
in supervisory skil ls , e . g . , being able to recognize what motivates
people.
Fai lure to sponsor all types of t raining, and particularly, man-
agement and supervisory training, has caused the shortage of skilled
management personnel suddenly being real ized by the banking industry
(23, p. 20). This absence of training will culminate in a tremendous
quantity of supervisors who cannot do their job. This situation will
resul t in high turnover, low morale , sloppy work habits and total in-
efficiency (15, p. 15). Another resul t of the lack of training will be
the inability of managers to effectively ca r ry out delegation. The
Taylorization of our work a reas has given r i s e to economics in the
cost of production, but has caused an underutilization of our most
costly and valuable resource - people (37, p. 28). Evidently banks
have not been able to recognize human resource as very costly asset ,
even in the accounting sense (6, p. 78). An asset is any future service .
There must be an expectation of future economic benefits. According
to Black (6), . . the acquisition of human resources typically in-
51
voives an economic cost, and the benefits associated with such r e -
sources can reasonably be expected to contribute to economic
effectiveness."
Rendail (37) recalls Herzberg's theory that good working con-
ditions (pay, benefits, decent environment, good supervision, etc.)
are necessary but are merely "satisfiers, " and do not motivate
employees. Challenging and meaningful work, responsibility and par-
ticipation are positive motivators (37, p. 29). According to Elaine
Rendail, this is a third wave" phenomenon. Employees (including
managers) he said, are shifting their focus from earning a paycheck to
the search for self-actualization in the work place. This third wave
syndrome was evident in the McAlister /Overstreet study (24) in which
bank managers reported the lack of satisfaction of their self-
actualization needs. Human resource development and participative
decision-making (decentralization) are probably the best ways to
establish the link of compatibility between the young managers expec-
tations and the organization's view of responsibility. Speaking of
Japanese beyond theory Y approach to human resource management.
Professor William Ouchi (8, p. 74) indicates that collective decision-
making reinforces the bond between the individual and the organization.
The manager and his subordinate manager must reach a meeting of
the minds for effective delegation to be possible (26, p. 47).
In a survey (15, pp. 58-62) conducted by the department of
52
human resources in the Kentucky state government, in which managers
and supervisors were asked to identify the necessary training needs
for managers and supervisors, the items which were seen to have the
greatest need were those intangible abilities relating to people. These
included motivation, leadership, and human relations. Those needs
that were seen as having the least benefit involved the more specific
procedures: budgeting, interviewing, conducting meetings. The
survey (17) conducted by the Center for Management Development (in
Nigeria) of training needs lacking in Nigerian managers, found among
others, personnel management, supervision and problem-solving.
The management of the human side of the enterprise has been
a problem area for managers. In a study (14, p. 12) that included 60
presidents of the Fortune's top 1000 companies, it was found that the
most anxiety producing problems faced by top company presidents
were failure to get critical information. Note should be taken that this
is a delegation problem which can be eased by effective training for
delegation. These same presidents, in outlining the skills they
thought will be vital to upper level managers in the 1980's, identified
leadership skills, and interpersonal communication skills. The most
often mentioned training needs are (15)
Motivation Decision-making
Developing employees Planning/Organizing
53
Communication Human Relations
Leadership Conflict Resolution
Delegation Management Methods
The importance of training has been s t ressed by many man-
agement educators and r e s e a r c h e r s . A study (17) by the Center for
Management Development (in Nigeria) revealed that en terpr ises in
which employees devoted at least three days a year for off- the-job
training had higher performance rating than others . "This finding, "
the study concludes, "demonstrated that training resul t s in increased
individual and group performance. " Top management scholars have
also s t ressed training. Miller (27, p. 130) quotes Chris Argyris as
saying that whoever sets out to change organizations in the direction
of being more effective, will do well to t ra in managers to work with
others so that they will be sensitive to the existence of the in ter-
personal b a r r i e r s preventing high levels of cooperative effort . A
recent study conducted by Professor Celestine Nwachukwu (30, p. 11)
found that those managers who received even only three months of
on-the-job training were more satisfied than others .
Management education should be considered a very ser ious
task by organizations including the banks. Because of the shortage of
qualified management candidates, the increased ra te of competition
among financial services industries, and the personal satisfaction,
growth and fulfilment of the managers , management education should
54
be considered imperative. It is important to note the advice that man-
agement education and training be able to include "the whole man".
The individual should be helped to develop an existential self-
awareness in the areas of increased personal autonomy, the ability to
focus on the here and now experiential data, and self expression of
one's internal feelings and attitudes (41, p. 58).
Training both within the organizations and through the utili-
zation of outside resources such as universities, various bank
educational associations and consulting f i rms are all encouraged (23,
p. 26). According to Collins (13, p. 19) the best managed banks are
those which have the complete participation and support of all its
people in the realization of its objectives. Training is necessary when
the manager decides to delegate to subordinate managers. But one
important aspect of delegation training is delegation itself. "A
fledgling flyer does not master flying by just observing the pilot.
Some principles may be learnt by observation but until the pilot stu-
dent is delegated the final accountability of the take off, flight and
landing, the training is not complete. " (26, p. 22) Organizations must
stimulate the growth and development of its talented employees.
CHAPTER BIBLIOGRAPHY
1. Amiebo, C. A. "Per formance Appraisal - - A Rejoinder, " Business Times, (January 6, 1981), 14.
2. Barre t t , J o h n H . , Individual Goals and Organizational Objectives: A Study of Integration Mechanisms, Ann Arbor, Michigan: Braun-Brumfield, Inc. , 1970.
3. Bedeian, A. G., Organizations: Theory and Analysis, Hinsdale, Illinois: The Dryden P r e s s , 1980.
4. Berger , C. J . and Cummings, L. L . , "Organization Structure: How Does it Influence Attitudes and Pe r fo rmance?" Man-agement Review, (February, 1977), 40-41.
5. Berlinger^ W. M. and McLarney, W. J . , Management Pract ice and Training, Homewood, Illinois: Richard D. Irwin, Inc 1974.
6. Black, T. G. , "Human Resource Accounting in Banking, " The Bankers Magazine, (July-August, 1980), 78-81.
7. Brown, Martha A . , "Values - - A Necessary but Neglected Ingre-dient of Motivation on the Job, " Academy of Management Review, (October, 1976), 15-23^ —
8. Byron, Christopher, "An Attractive Japanese Export, " Time, (March 2, 1981), 74. '
9. Carl is le , H. M. , Management: Concepts and Situations, Chicago: Science Research Associates, Inc . , 1976"
10. Carl is le , H. M. and Shetry, Y. K . , "A Contingency Model of Organization Design," California Management Review. XV (1972), 38-45.
11. Carl is le , J . H . , "Office Automation in Banking, " The Bankers Magazine, 163 (March-April , 1980): 51-54.
12. Child, John, "Managerial and Organizational Fac tors Associated with Company Performance, " Journal of Management Studies, 12 (February, 1975): 13-25. ~
55
56
13. Collins, Normal J . , "The Human Aspect of Bank Management, " Journal of Commercial Bank Lending, (September, 1974).
14. Conarroe, Ron, "Presidents Unnerved by Subordinate Slip-ups, " Training and Development Journal, (September, 1980), 12.
15. Culbertson, K. and Thompson, M. , "An Analysis of Supervisory Training Needs, " Training and Development Journal, (February, 1980), 58-62.
16. Diebold, John, "Automation and Changing Structures in Financial Services, " The Bankers Magazine, 163 (March-April. 1980): 25.
17. Dikko, A. M. , Training Needs in Industrializing Society, Ibadon, Nigeria, 1978.
18. Drucker, P. F . , People and Performance: The Best of Peter Drucker on Management, New York: Haroer'FCoUefre Press 1977.
19. Euske, K. J . , Jackson, J r . , D. W. and Rief, W. E . , "Per for -mance and Satisfaction of Bank Managers, " Journal of Bank Research, II (Spring, 1980), 36-42.
20. Ford, D. L. and Nemiroff, P. M. , "Task Effectiveness and Human Fulfilment in Organizations: A Review and Development of a Conceptual Contingency Model, " Academy of Management Review, (October, 1976), 69-81.
21. Hellriegel, D. and Slocum, J r . , J. W., "Organizational Design: A Contingency Approach, " Business Horizons, (April, 1973). 56-68.
22. Hurwitz, Judith, "Nigeria Reflects Africa 's Microcomputer Poten-tial, " Mini-Micro Systems, 12 (August, 1979): 39-40.
23. Kitka, J . M. , "The Growing Need for Bank Training, " Burroughs Clearing House, 59 (October, 1974): 26-66.
24. McAiister, M. K. and Overstreet , G. A. , "A Comparative Job Satisfaction Levels Among Bank Managers, " Journal of Bank Research, (Winter, 1979), 213-217.
57
25. McCall, A. S. and Savage, D. T . , "Branching Policy: The Options, " Journal of Bank Research, (Summer, 1980), 122-124.
26. McConkey, D. D. , No-Nonsense Delegation, New York: American Management Association, 1974.
27. Miller , E . J . , Task and Organization, London: John Wilev and Sons, L td . , 1976.
28. Mitchell, T. R. and Scott, G. W., Organization Theory: A Struc-tural and Behavioral Analysis, Homewood, Illinois: Richard D. Irwin, Inc. , 1976.
29. "Mortgage Banks Get More Powers, " Sunday Sketch, (January 4, 1981), 16.
30. Nwachukwu, Celestine, "Effective Utilization of Females in Man-agement Positions, Management in Nigeria, (September. 1980), 6-12.
31. Nwankwo, G. O . , Niger ia 's Financial System, MacMillan, 1981 as reviewed in "Surveying the Role of Banks, " West Afr ica , (March 2, 1981), 440-443.
32. Nigeria: A Survey of U. S. Business Opportunities, Washington, D. C . : Department of Commerce Publications, 1976.
33. "Nigeria Eases Investment Rules , " West Afr ica , (February 5 1981), 332.
34. Ogwuma, P. A . , "The Growth of Banking Industry in Nigeria, " Business Times, (January 6, 1981), 11-22.
35. "Onabanjo P ra i se s Bank on Rural Development, " Daily Times, (January 5, 1981), 11. '
36. Peterson, R. O . , "Human Resource Development Through Work Design, " Training and Development Journal, (August, 1976). 3-6.
37. Rendali, Elaine, "Quality Circles - - A 'Third Wave' Intervention," Training and Development Journal, (March, 1981), 28-31.
58
38. Rice, A. K. , The Enterprise and Its Environment; A System Theory of Management Organization, London: Tavistock Publications, 1963.
39. Schatz, S. P . , Nigerian Capitalism, Berkeley: University of California Press , 1977.
40. Schoderbek, C. G., Schoderbek, P. P. and Kef a las, A. G. , Management Systems - - Conceptual Considerations, Dallas: Business Publications, Inc., 1980.
41. Selfridge, R. J . and Sokolik, S. L . , "A Comprehensive View of Organization Development, " MSU Business Topics, (Winter. 1975), 46-60.
42. Smith, J r . , G. A. , Managing Geographically Decentralized Com-p a r e s . Cambridge, Massachusetts: The Riverside P r e s s " 1958.
43. Thompson, J . D. , Organizations in Action, New York- M c G r a w -Hill, 1967. "
44. Toren, Nina, "Bureaucracy and Professionalism: A Reconsid-eration of Weber's Thesis, " Academy of Management Review. 1 (July, 1976): 36-41.
45. Vincent, Ola, "The Banking Industry in the 80's, " Management in Nigeria, (September, 1980), 14-19.
46. Vincent, Ola, "Money Flow in the 1980's, " Development Digest, (October-December, 1980), 247-251. '
CHAPTER III
PROCEDURES OF THE STUDY
AND DATA PRESENTATION
In Chapter I, the general design of the study was introduced
along with problem specifications, background and significance, l imi-
tations, and assumptions. Chapter III describes in greater detail:
(1) the r e sea rch methodology, (2) the population of the study, (3) the
study instrument, (4) the process of data collection, and (5) the pre-
sentation of data.
Research Methodology
This study is pr imari ly concerned with ascertaining the status
of managerial decentralization and with determining training needs for
managerial decentralization in banks in Nigeria. The study is explora-
tory and intended to look into specific organizational elements. The
choice of the multiple case study method may be criticized for the lack
of generalizability of the findings. However, since this is an explora-
tory study intended to look into specific problems that a r i se f rom
particular organizational ar rangements , the choice may be warranted.
According to Jackson and Morgan (5, p. 38), . . in many instances
if impressions of organizations, i t ' s the only method that f i ts ; for ex-
59
60
ploratory studies that lead to the development of theories , the case
study or multiple case studies may be among the most effective ways
of gathering initial information. "
The Population of the Study
The study is an in-depth case study of four carefully selected
banking establishments and their branches. The group of banks studied
is comprised of one of the three largest banks in Nigeria, one com-
merc ia l bank with the full allowable foreign interest of 40 percent of
the equity, one bank wholly-owned by the Nigerian government, and one
other indigenously owned bank. One common denominator among these
banks is that they all have branches in Imo state, Nigeria. The se lec-
tion of the particular bank to study in each group of banks was made by
strat if ied sampling listing each bank in each group on a separate
slip of paper and drawing the slips f rom a container.
Since the study deals with decision processes and since decen-
tral izat ion and delegation in an organization may be a function of the
top echelon's perception of the necessity for delegation of the decision-
making function, it was decided that interviewees should be those whose
reponsibility it is to delegate. In this regard , it was decided that the
interviewees at the headquarters level should include the president
and six department and sub-department (or units) managers . This
came to a total of seven interviewees at each of the four headquar ters .
61
It was also decided that the interviewees at the branch level should in-
clude the branch general manager and two department managers or
supervisors, thus making a total of three interviewees at each branch
level. The total number of interviewees is forty, but the interviewer
had the freedom to interview more people if he so desired in order to
provide for greater depth.
The Instrument
An extensive survey of the literature on managerial decentrali-
zation and management development was made. The various elements
of these subjects were deciphered and studied. These elements in-
clude: the allocation of powers and responsibilities between headquarters
and the local level, organizational contingencies, organizational en-
vironments, structural arrangements, the human side of the enterprise,
training and development, and sociotechnical systems. An interview
guide was used (see appendix) to ensure consistency in the interview
process. This interview guide was designed after an extensive survey
of the li terature. Among the management theories, works and philoso-
phies that influenced the design of the interview guide were Douglas
McGregor's theory "X" and theory "Y, " Raymond E. Miles' theories
of management, Drucker's concepts of strong center and strong parts,
George Albert Smith's seminal work on managing geographically de-
centralized companies, and Howard M. Carlisle 's Management;
Concepts and Situations.
63
with equal intensity. The branch general manager and two assistant
managers were interviewed at this level.
Interviews were secured mainly through prior appointments.
A letter (see appendix) introducing the interviewer and stating the pur-
poses of the study was issued by the supervising professor for this
study, Dr . Roderic C. DuChemin of North Texas State University.
This letter was instrumental toward securing the appointments for the
interview.
Procedure for Presentation of Data
The data a re presented in a descriptive form. Tables, a rank-
ing methodology and where necessary, percentages, a r e used as media
for the presentation. There a r e four different case studies and the
data for each bank a re presented in the case study of that bank. There
is a fifth and final combinatorial study devoted to the comparison of
the salient aspects of the entire set of data.
Each case study is presented with the original six major r e -
search questions as the basic format for the presentation. The f i rs t
r e sea rch question and the data pertinent to it a re treated f i r s t , then the
second r e sea rch question and its data a re treated and so on.
In each case study, the general information pertaining to the
background of the bank is presented f i r s t . The f i r s t r e sea rch question
is res ta ted . The table or tables presenting the data pertinent to the
62
The interview guide was designed to secure information per t i -
nent to the six major r e sea rch questions. It was designed in such a
manner as to obtain mainly "yes" or "no", and "much", "li t t le", or
"none" answers in order to easily tabulate the responses . It was also
designed to allow some discretion on the part of the interviewer. A
pilot study was undertaken in three selected banks in Denton, Texas,
to test the effectiveness of parts of the interview guide in seeking
answers to the r e sea rch questions and to update the interview guide.
The guide was later validated by a panel of three experienced profes-
so r s of management at North Texas State University who rated it very
pertinent to the study.
Data Collection
Interviews were held at the headquarters level of each of the
four selected banking establishments. The headquarters of these
banks a re located in Lagos, Nigeria. These interviews were held
with the president, and the department and sub-department managers
at the headquarters levels. Sometimes, repeat interviews were a r -
ranged to allow the interviewer more t ime to finish parts of the in ter -
view or to allow for the exploration of the subject beyond the
specifications of the interview guide. The branches studied were
located in Imo State, Nigeria, about four hundred miles away f rom
Lagos, the location of the headquar ters . These branches were studied
64
resea rch question a re introduced. The data a re summarized and a
ciscussion, as appropriate, concludes the t reatment and presentation
of the r e sea rch question. The second r e sea rch question is res ta ted .
The tabie or tables a re introduced, summarized, and discussed. The
third, fourth, f if th, and sixth r e sea rch questions and their data a r e
t reated and presented in a like fashion.
Explanation of the Ranking Methodology
In the presentation of the data to r e sea rch questions five
through six, it was helpful to use a ranking system in showing the
skills or competencies that managers felt were important. Items
which were considered very important or deserving of much emphasis
were assigned a score of two (2). Those that were considered of aver -
age importance or deserving of little emphasis were assigned a score
of one (1). "Not important" or "no emphasis" i tems were given zero.
Each competency, or program was given a weighted score based on
the number of managers scoring the item as "much emphas is ," "little
emphasis , ' or "no emphasis"; or "very important ," "average impor-
tance, " or "not important. " If, for instance, each of four managers
give an item "much emphasis" and a fifth manager gives it "average
emphasis, " then the weighted score would be nine (9) (i. e. 2 2 2 2
1 9).
65
Case Study—Bank A
General Information
Name of Bank: Bank A
Number of Branches: 36
Date of Interview: December, 1980
Ownership: Foreign Interes t - -40 percent, Nigerian government and
public--60 percent
Total Asset Size: N 500 mis ($950 mis)
Type of Bank: Commercial
Number of Employees: 1300
The f i r s t r e sea rch question is "what is the status of managerial
decentralization in the selected bank?" Tables I, II,and,III present the
data pertinent to this r e sea rch question. Table I presents the Organi-
zation Chart of Bank A to give a formal view of the authority
s t ructure in the bank. This table will be discussed f i r s t .
As can be seen by the examination of the organization chart ,
there a re two executive directors under the managing director (or
president). Directly under the executive director level a r e four divi-
sional general managers (DGMs). The divisionalization is based on
function and on geographical location. Three of the four divisions
(Corporate Client, Finance and Staff and Administration) a re function-
ally based. The fourth division, branches, is geographically based
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67
and is responsible for the coordination of the branches outside Lagos
area . All the DGMs except the DGM for Staff and Administration r e -
port to one of the executive di rectors . The DGM for Staff and
Administration report directiy to the president. Below the DGMs a re
the assistant general managers (AGMs) and they report to the DGMs.
Under the DGM-branches, a re the Eas tern , Northern, and Western
area managers . Each area head office directs the activities of the
branches under its jurisdiction.
Table II, page 68, presents the data concerning the managers '
knowledge of the existence of information about purpose, plans, and
policies. The data also concern the status of decentralization.
As can be seen by examination of Table II, four (4) of the seven
(7) headquarter interviews indicated that there a re written statements
of purpose and three (3) indicated a lack of knowledge of the statement.
Three (3) indicated that there a re written statements of long-range
plans and four (4) indicated lack of knowledge of such written s ta te-
ments . The distribution is quite uneven with regard to statements of
policies (6 "yes" and 1 "no") and short-range goals (5 "yes" and 2
"no"). Concerning the remaining i tems, all seven (7) headquarter in-
terviewees indicated that the bank does not have a policy to grant op-
erational autonomy to the branches and departments. As regards top
management support for decentralization, two (2) indicated that top
management supports decentralization and five (5) indicated that top
68
TABLE II
MANAGERS' KNOWLEDGE OF INFORMATION AND MANAGERS' DELEGATION PRACTICES
IN BANK A
Questions
Responses*
Questions
Head-quarters Branch Total
Questions Yes No Yes No Yes No Does the bank have written statements of the following:
Purpose or mission Long range goals Policies Short range goals
4 3 6 5
3 4 1 2
1 1 2 1
2 2 1 2
5 4 8 6
5 6 2 4
Does the bank have policy to grant operation autonomy to the branches and departments? 0 7 0 3 0 10 Does top management support de-centralization? 2 5 0 3 2 8 Do your subordinates participate in determining work and performance standards ? 3 4 1 2 4 6 Are decisions made where the operation takes place? 3 4 0 3 3 7
"Interviewees (N=10); Headquarters N=7 as follows: the Pr esi-O " * -c i v i c i i i a g c x | m i C C
Managers. Branch N=3 as follows: the Branch Manager and two Assistant Managers.
management does not support decentralization. The seven (7) inter-
views are, however, as evenly divided as possible regarding
subordinate participation in the determination of work and performance
standards (3 "yes" and 4 "no") and regarding whether decisions are
made where the operation takes place (3 "yes" and 4 "no").
69
When responses of the three (3) branch interviewees are
examined, it is seen that with regard to knowledge of the existence of
written statements of purpose, the response is 1 "yes" and 2 "no"; with
regard to iong-range goals, it is 1 "yes" and 2 "no"; with regard to
policies, it is 2 "yes" and 1 "no"; and with regard to short-range goals,
it is 1 "yes" and 2 "no. " All three (3) interviewees also indicated that
the bank does not have policy to grant operational autonomy to branches
and departments, that top management does not support decentrali-
zation, and that decisions are not made where the operations take
place. One (1) of the three (3) branch interviewees indicated that his
subordinates participate in determining work and performance stan-
dards and the other two (2) indicated that their subordinates do not
participate.
In the examination of the total for all the ten (10) interviewees,
it is seen that the responses to whether the bank has written statements
is 5 "yes" and 5 "no1' for purpose or mission; 4 "yes" and 6 "no" for
long-range goals; 8 "yes" and 2 "no" for policies; and 6 "yes" and 4
no for short-range goals. All the ten (10) interviewees indicated
that the bank does not have a policy to grant operational autonomy to
the branches and departments. Two (2) indicated that top management
supports decentralization and eight (8) indicated that it did not support
decentralization. Four (4) interviewees indicated that their subordi-
nates did not participate in such an activity. Concerning whether
70
decisions are made where the operation takes place, three (3) said
"yes" and seven (7) said "no".
In checking the data in Table II against the f irst research
question--"what is the status of managerial decentralization in the
selected banks ?"--decisions are not generally made where the oper-
ation takes place, there is a low degree of subordinate participation
in decision-making, and there is a low degree of top management sup-
port for decentralization. It 's rather surprising that many of the
interviewed managers have no knowledge of the existence of some vital
information about their company.
Table III, page 71, presents a linear responsibility chart to
show who makes what decisions, and how far down in the organization
some decision-making authorities are delegated.
As can be seen by examination of Table III, decisions concern-
ing long-range goals and budgets are initiated, developed, and approved
by the Board of Directors. The board develops and approves policies.
The board also approves the following: short-range goals, control
measures, product design, performance evaluation, loans and invest-
ments.
The bank's president initiates, develops, and approves control
measures. He initiates and approves action plans; he initiates and
provides input in long-range goals, budgets, and product design. He
approves loans and investments also.
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The vice presidents (general managers) provide inputs in long-
range goals, budgets, controls, and product design. They participate
in the development of shor t - range goals, performance evaluation mea-
sures , and action plans. They approve performance evaluations and
loans.
Management committees develop policies, shor t - range goals,
control measures , performance evaluations, and action plans. They
provide inputs in budgets and product designs.
The department heads initiate performance evaluations, loans,
and investments. They develop performance evaluations, loans, and
investments. They also approve performance evaluations and loans.
The regional and area managers provide inputs in the formu-
lation of control measures and actions plans. They initiate, develop,
and approve performance evaluations, and they also approve loans.
The branch managers initiate and develop performance eval-
uations and loans. They approve performance evaluations and they
provide inputs in making and applying control measures . The super-
visors provide inputs in controls, performance evaluations, and loans.
With re fe rence to the r e sea rch question--"what is the status of
managerial decentralization in the selected bank?"- - i t can be seen
that department heads and branch managers do not contribute in the
making of important decisions like long-range goals, policies, bud-
73
gets, product design, etc. Indeed it can be concluded that the parts
(branches) of this bank are weak. The status of decentralization is
very low.
The second resea rch question is "what a re the variables that
influence decentralization in the selected banks?" Table IV presents
the data pertinent to this r esea rch question. The table presents an
a r r ay of situational variables existing in the organization's environ-
ment and having impact on its decision to centralize or decentralize its
operations.
TABLE IV
FACTORS AFFECTING DECENTRALIZATION IN BANK A*
Centralize Decentralize No-effect Competition X Scarcity of skilled managers X Geographic dispersion X ; Growth (size) X Government regulations:
X
1. Rural banking scheme X 2. Ente rpr i ses Promo- X
tion Decree Government participation X Nature of the market X
^ O r v a < v i f "• A a X ± 1 -
3 5
As the above table shows, five (5) of the eight (8) variables a re
seen by the president of Bank A to be pulling the organization towards
74
managerial decentralization. These five variables a re : competition,
geographic dispersion, growth, r u r a l banking scheme, and the nature
of the market . The three (3) remaining factors a r e seen to be pulling
the organization towards centralization, and these are the scarci ty of
skilled managers , the enterpr ises promotion decree, and government
participation in equity.
The third r e sea rch question is "what a re the attitudes of the
bank managers toward decentralization of decision-making?" Table V,
page 75, presents the data pertinent to this r e sea rch question. The
table presents data concerning the attitude of the bank managers
toward their subordinates ' willingness and ability to work and to han-
dle tasks involving self-direct ion and decision-making. The table
consists of six pairs of statements. The statements marked "X" a re
interpreted to be negative toward man 's willingness and ability to
work. Those marked "Y" a re interpreted to be positive.
As can be seen by examination of Table V, half (5) of the in te r -
viewees felt that people do not real ly like to work, and another half felt
that people a re more committed toward goals they have helped to e s -
tablish.
In the second pair of statements, seven (7) of the interviewees
supported the statement that only few of their subordinates can handle
work which requi res creativity, self-direct ion, and self-control .
Three (3) supported the statement that most of their subordinates can
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76
exercise far more responsibility, self-direct ion, and seif-controi than
their present job demands. The same seven (7) and three (3) dis tr i -
bution is seen in the fourth pair of statements with seven (7) inter-
viewees identifying with the view that the manager must establish
detailed work routines and enforce them firmly but fairly and the other
three (3) interviewees identifying with the statement that the manager
must encourage participation in important matters and aid in manage-
ment development.
In the third pair of statements, six (6) of the ten (10) managers
interviewed held the view that the manager's basic task is to closely
supervise and control his subordinates. The remaining four (4) inter-
viewees thought that the manager's basic task is to create an
environment which will enable subordinates to work to the limits of
their ability.
In the sixth pair of statements, six (6) managers indicated that
they do not have confidence that their subordinates will carry out dele-
gated responsibilities effectively. Four (4) indicated that they have
confidence that their subordinates will do an effective job in carrying
out delegated responsibilities.
Comparing the data against the research Question——"what is
the attitude of the bank managers toward decentralization of decision-
making? " - - i t can be seen from the summation at the end of the table
that thirty-nine (39) of the sixty (60) or 65 percent of the responses
77
received indicated support for the "X" statements interpreted to be
negative toward man's willingness and ability to work and to handle
tasks requiring creativity, self-control, and dec is ion-making.
The fourth research question is "what training, if any, have
bank managers had in the skills needed for decentralization?" Table
VI presents the data pertinent to this question. The table presents
data concerning the skills in which interviewed managers have r e -
ceived some training.
TABLE VI
COMPETENCY AREAS IN WHICH INTERVIEWEES HAVE RECEIVED TRAINING
Managers Have Received Number That Received Training in: Training
Bank technical skills 6 In-house training 6 Coaching 6 Decision-making/problem-solving 5 Conceptual management theories 4 Continuing education program 3 Job rotation 3 Leadership skill 2 Motivation skill 1 T-group/sensitivity program 0 Communication skill 0
1 — • W i U x u i i u * V D , JL JL C D l U C I l t ,
two Assistant General Managers, one Area Manager, three Unit Man-agers. Branch N=3 as follows: Branch Manager and two Assistant Managers.
78
As Table VI shows, six (6) of the ten interviewees at Bank A
have had training in bank technical skil ls . Six (6) have had some type
of in-house training, six (6) have been coached, five (5) had had
decision-making/problem-solving training, four (4) had had conceptual
management theories,and three (3) have been through continuing edu-
cation programs. Three (3) indicated they have had job rotation, two
(2) have had leadership skill training, and one (1) has had training in
motivation skill. None has had communication skill training and none
has been through a T-group/sensi t ivi ty program.
With re fe rence to the r e sea rch question, it can be seen that
most of the managers have not had training in the a reas pertinent to
interpersonal relationships and organization behavior. These a reas
a re : leadership skill, motivation skill, T-group/sensi t ivi ty program,
and communication skill .
The fifth r e sea rch question is "what general management com-
petencies do the bank managers consider necessary for managerial
decentral izat ion?" Table VII, page 79, presents the data relevant to
this question. The table presents the data concerning the competen-
cies the interviewed Bank A managers consider necessary for mana-
gerial decentralization.
As Table VII indicates, ail the ten (10) interviewed Bank A
managers thought that communication skill, motivation skill, and lea-
dership skill a re very important for managerial decentralization.
79
TABLE VII
COMPETENCIES FOR MANAGERIAL DECENTRALIZATION ACCORDING TO INTERVIEWED BANK A MANAGERS*
Weighted Very Average Not Ranking Score Important Importance Important
Communication skill 20 10 Motivation skill 20 10 Leadership skill 20 10 Training skill 19 9 1 Analytical problem-solving 19 9 1 Administrative skill 18 8 2 Technical skill 17 8 1 1 Decisiveness 17 7 3
1
Conflict resolution skill 16 6 4 Aggressiveness
vU T * T ^ • _ TVT H A
5 1 4 5
i , c l o j.N-, I U U O W S : ^resident, two Assistant General Managers, one Area Manager, three Unit Man-agers. Branch N=3 as follows: the Branch Manager and two Assistant Managers.
Other competencies thought to be very important, and the number of
managers holding that view are: training skill (9), analytical problem-
solving (9), administrative skill (8), technical skill (8), decisiveness
(7), conflict resolution skill (6), and aggressiveness (1).
The competencies thought to be of average importance and the
number of managers of that opinion are training skill (1), problem-
solving skill (6), administrative skill (2), technical skill (1), decisive-
ness (3), conflict resolution skill (4), and aggressivenss (4). Technical
skill is considered to be unimportant for managerial decentralization
by one (1) of the managers interviewed. Aggressiveness is also con-
sidered unimportant by five (5) managers.
80
Referr ing again to the r e sea rch question--"what general man-
agement competencies do the bank managers consider necessary for
managerial decentra l izat ion?"-- i t can be seen that the i tems which
a re seen to be of greater need a re those abilities relat ing to human
interaction in the work setting.
The sixth r e sea rch question is "how may the needed compe-
tencies be developed?" Tables VIII and IX present the data pertinent
to this question. Table VIII, page 81, presents the data concerning
programs the interviewed Bank A managers think should be empha-
sized in developing competencies for managerial decentralization.
Table VIII will be discussed f i r s t .
As can be seen, all the ten (10) managers interviewed at this
bank thought that much emphasis should be placed on motivation skill
training and decision-making workshop in the development of compe-
tencies necessary for managerial decentralization. Other programs
which should be emphasized and the number of managers of that opinion
a re T-group/sensi t ivi ty training (9), meetings and conferences (9),
courses in management theory (8), in-house training (8), coaching (7),
university executive development (5), job rotation (6),and continuing
education (2).
P rograms which are considered to be needing only little em-
phasis and the number of interviewees holding such views are : T-group/
sensitivity program (1), meetings and conferences (1), courses in man-
81
TABLE VIII
PROGRAMS FOR DEVELOPING COMPETENCIES FOR DECENTRALIZATION ACCORDING TO BANK A
MANAGERS INTERVIEWED*
Ranking Weighted Emphasis
Ranking Score Much Little None Motivation skill program 20 10 Decision-making workshop 20 10 T-group/sensitivity training 19 9 1 Meetings and conferences 19 9 1 Courses in management theory 18 8 2 In-ho use training 18 8 2 Coaching 17 7 3 University executive development 15 5 5 Job rotation 14 6 2 2 Continuing education 10 2 6
Ci
2
~ ^ ^ ^ v > li^auHuai p I> - i dS iO LJLO WS: FTeSlueilt, two Assistant General Managers, one Area Manager, three Unit Man-agers. Branch N=3 as follows: the Branch Manager and two Assistant Managers.
agement theory (2), in-house training (2), coaching (3), university
executive development program (5), job rotation (2), and continuing ed-
ucation (6).
Two (2) managers thought that job rotation should not be em-
phasized for the purpose of developing managers for managerial
decentralization. Two (2) also felt that continuing education should not
be emphasized.
Table IX, page 82, presents the data concerning the opinions of
the interviewed bank managers as regards the subjects they think
82
TABLE IX
SUBJECTS TO EMPHASIZE IN UNIVERSITY CURRICULUM FOR MANAGEMENT DEVELOPMENT ACCORDING
TO INTERVIEWEES*
Ranking Weighted Emphasis
Ranking Score Much Little None Motivation 20 10 Communication skill 19 9 1 Analytical problem-solving 19 9 1 Human relations 18 8 2 Organization behavior 18 8 2 Management/Administration 18 8 2 Business policy formulation 17 7 3 Finance 16 6 4 Accounting 15 5 5 Operations 14 4 6 Marketing 13 3 7 Computer technology 10 1 9 Psychology 8 8 2 Sociology 8 8 2
-- , cid iuuuwa: r res iaeni , two Assistant General Managers, one Area Manager, two Department Managers. Branch N = 3 as follows: the Branch Manager and two Assistant Managers.
should be emphasized in the university curriculum for management
development.
As can be seen, all the ten (10) interviewees indicated that
motivation skill should be much emphasized. Nine (9) each indicated
that communication skill and problem-solving skill should have much
emphasis. Other programs considered to require much emphasis and
the number of interviewees of such opinions are: human relations (8),
organization behavior (8), management/administration (8), busi iiness
83
policy formulation (7), finance (6), accounting (5), operations manage-
ment (4), marketing (3), and computer technology (1).
Programs thought to be requiring only little emphasis and the
number of interviewees of that opinion are: communication skill (1),
analytical problem-solving (1), human relations (2), organization
behavior (2), management/administration (2), business policy formu-
lation (3), finance (4), accounting (5), operations (6), marketing (7),
computer technology (9), psychology (8), and sociology (8).
Two (2) managers think that psychology should not be empha-
sized, and two (2) think sociology should not be emphasized.
84
Summary
Bank A has written statements of goals, purpose, and policies
to help it in the co-ordination of the activities of the various divisions
and branches. It is important to point out, however, that some mana-
gers a re not aware of the existence of these written s tatements . Only
40 percent of the managers interviewed, for example, a r e aware of
the written statements of long-range goals. Bank A has no decentral i -
zation policy, and the perception of 80 percent of the managers in te r -
viewed is that top management does not support decentralization.
There is a low subordinate participation in the determination of work
and performance standards. The branch managers have no input in
important decisions like goal formulation, budgets, policies, product
design, and action plans. This implies that adequate effort is not
made to tap the resources of those who have gained a wide knowledge
that comes f rom operating experience.
The president of Bank A feels that environmental factors like
competition, the geographic decentralization of s t ruc ture , growth and
size, governmental regulations, and other market forces a r e pulling
the organization towards a decentralized s t ruc ture .
The responses received f rom the Bank A interviewees indicate
a negative managerial attitude toward subordinates ' ability and willing-
ness to work, to participate effectively in decision-making, and to
ca r ry out delegated responsibil i t ies effectively.
85
Case Study—Bank B
General Information
Name of Bank: Bank B
Number of Branches: 16
Date of Interview: January, 1981
Ownership: 100 percent government
Total Asset Size: N 600 mis ($1. 14 billion)
Type of Bank: Merchant Bank
Number of Employees: 1000
The f i r s t r e sea rch question is "what is the status of managerial
decentralization in the selected banks?" Tables X and XI present the
data pertinent to this question. Table X, page 86, presents the data
concerning statements of purpose, plans, policies, and decentral i -
zation and will be discussed f i r s t .
As can be seen f rom examination of Table X, all seven (7) head-
quar ters interviewees indicated that there a re written statements of
purpose, long-range goals, and policies. Five (5) indicated that there
a r e written statements of shor t - range goals and two (2) indicated that
there a re no such statements . Concerning the remaining i tems, all
seven (7) interviewees indicated that the bank does not have a policy to
grant operational autonomy to the branches and departments. The
seven (7) interviewees a re , however, as evenly divided as possible r e -
86
TABLE X
MANAGERS' KNOWLEDGE OF INFORMATION AND MANAGERS' DELEGATION PRACTICES
IN BANK B
Head-
Questions quarters Branch Total
Questions Yes No Yes No Yes No Does the bank have written statements of the following:
Purpose or mission Long range goals Policies Short range goals
7 7 7 5
0 0 0 2
3 1 2 1
0 2 1 2
10 8 9 6
0 2 1 4
Does the bank have policy to grant operation autonomy to the branches and departments? 0 7 0 3 0 10 Does top management support de-centralization? 3 4 0 3 3 7 Do your subordinates participate in determining work and performance standards ? 3 4 0 3 3 7 Are decisions made where the operation takes place? 2 5 0 3 2 8
Responses*
v / > u^au^uai tciB JL\ — / dfc) IOLJLOWS: JrT6SlU€ three Department Heads and three Assistant Heads. Branch N=3 as follows: the General Manager and two Assistant Managers.
garding top management support of decentralization (3 "yes" and 4
"no"). With reference to whether their subordinates participate in
determining work and performance standards, three (3) indicated they
allow participation and four (4) indicated that they did not. There is
a greater difference in the answers concerning whether decisions are
made where the operation takes place (there were 2 "yes" and 5 "no").
87
When responses of the branch interviewees a re examined, it is
seen that ail three (3) indicated that written statements of purpose
exist. They are divided regarding long-range and short-range plans
(1 "yes" and 2 "no") and regarding policy (2 "yes" and 1 "no"). All
three (3) branch interviewees indicate that the bank does not have a
policy to grant operation autonomy to branches and departments, that
top management does not support decentralization, that their subor-
dinates do not participate in the determination of work and performance
standards and that decisions a re not made where the operation takes
place.
When the total for all the ten (10) interviewees a re examined,
it is seen that all indicate presence of written statement of purpose or
mission and that all indicate that the bank does not have a policy to
grant operation autonomy to the branches and departments. Concern-
ing long-range goals, eight (8) indicated knowledge of the presence of
the written statements and two (2) indicated lack of that knowledge.
Concerning policies, the answers were 9 "yes" and 1 "no", and 6
"yes" and 4 "no" for short-range goals. A s imilar lack of unanimity
is evidenced with concern to top management support for decentral i-
zation (3 "yes" and 7 "no"), subordinates participation in determining
work and performance standards (3 "yes" and 7 "no"), and whether
decisions a re made where the operation takes place (2 "yes" and 8
"no").
88
With re fe rence to the f i r s t r e sea rch question--"what is the
status of managerial decentralization in the selected banks"- - there a re
a low level of employee participation in decision-making and a low
level of top management support for decentralization. The bank does
not have a policy to decentralize its branches. The presence of written
statements of mission, long-range goals, policies, and shor t - range
goals indicates that there is a strong central body to supervise and
control the af fa i rs of the branches to achieve the overall objectives.
Table XI, page 89, presents a linear responsibility chart to
show who makes what decisions and how far down in the organization
some decision-making authorities a re delegated.
As can be seen f rom examination of Table XI, whose data is
provided by the president of Bank B, long-range goals, policies,
shor t - range goals, budgets, and product designs are initiated, devel-
oped, and approved by the board of d i rec tors . The board also approves
control measures , performance evaluations, and loans. It initiates
and approves investments.
The president provides inputs in the formulation of long-range
goals, shor t - range goals, and budgets. The president initiates and
approves policies, controls, product designs, performance evaluations,
and action plans. He also initiates investments.
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The vice president provides inputs in decisions concerning
policies, shor t - range goals, budgets, controls, and product designs.
He approves performance evaluations and initiates and approves action
plans.
Management committies develop product designs, performance
evaluations, and action plans. The department heads initiate and de-
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performance evaluation and controls. They also initiate and develop
loans. Branch managers and supervisors provide inputs in controls
and performance evaluations.
Referr ing again to the f i r s t r e sea rch question--"what is the
status of managerial decentralization in the selected banks?" - - i t can
be seen that the more strategic and important decisions: goals, poli-
cies, budgets, product design, and investments, a re made exclusively
by the top h ierarchy. It should be recal led, however, that this is a
government owned bank and the profit motive is not a strong factor in
its operation. The only authorities that a re well delegated a re control
and performance evaluation. However, these two functions a re more
of work-flow operating activities than they are decision-making a reas .
Judging f rom Table XI, Bank B is highly centralized.
The second r e sea rch question is "what a r e the variables that
influence decentralization in the selected banks?" Table XII, page 91,
91
TABLE XII
FACTORS AFFECTING DECENTRALIZATION IN BANK B*
Centralize Decentralize No-effect
Competition X Scarcity of skilled managers X Geographic dispersion X Growth (size) X Government regulations:
1. Rural banking scheme X 2. Enterpr i ses promotion
decree X Government participation X Nature of the market X
3 2 3
*Source of Data: the President of Bank B.
presents the data pertinent to this question. It presents the data con-
concerning the situational variables that affect bank management
decision to decentralize or centralize its operation.
As the above table shows, the situational variables that a re
seen to be pulling the organization towards managerial decentral i-
zation are geographic dispersion and growth. More variables a re
seen (by this top executive) to be pulling the bank towards central i -
zation, and these are : scarci ty of skilled managers , government
participation, and the nature of the market . Competition and the
government regulations are seen to have no effect on the decision to
centralize or decentralize.
92
The third r e sea rch question is "what a re the attitudes of the
bank managers toward decentralization of decision-making?" Table
XIII, page 93, presents the data for this question. The table presents
data concerning the attitude of the bank managers toward their subor-
dinates ' willingness and ability to work and to handle tasks involving
decision-making. The table contains six pairs of s tatements . The
statements marked "X" are interpreted to be negative toward man 's
ability to work. Those marked "Y" a re interpreted to be positive.
As can be seen f rom Table XIII, in the f i r s t pair of s tatements ,
more managers identify with the statement "people don't real ly like to
work" (8 out of 10), than with the statement "people want to contribute
toward meaningfuL goals which they have helped to establish" (2 out of
10). The same distribution is seen in the fourth pair of statements
with eight (8) indicating that the manager must establish detailed work
routines and procedures and enforce them f i rmly but fair ly, and two
(2) indicating that the manager must encourage full participation on im-
portant mat te rs to broaden subordinate self-direct ion and control and
thus aid in management development. There is an even distribution
of five (5) each between those who indicated that only few of their
subordinates can handle work requiring creativity, self-direct ion and
self-control , and those who indicated that most of their subordinates
can exercise far more responsibili ty, self-direct ion, and self-control
than their present job allows. The same even distribution was seen
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94
in the statements "I do not have confidence that my subordinates will
car ry out delegated responsibil i t ies effectively" (5), and "I have con-
fidence that they will" (5).
With re fe rence to the r e sea rch question "what a re the attitudes
of the bank managers toward decentralization of decision-making", it
can be seen f rom the table that the major i ty of the managers in ter -
viewed in Bank B indicated support for the "X" statements interpreted
to be negative toward man 's ability to work and to handle tasks requir ing
creativity, self-control , and decision-making.
The fourth r e sea rch question is "what training, if any, have
bank managers had in the skills needed for decentral izat ion?" Table
XIV, page 95, presents the data pertinent to this question. The table
presents data concerning the skills in which interviewed managers
have received training.
As Table XIV shows, seven (7) of the ten managers interviewed
indicated that they have received some type of in-house training. Six
(6) indicated they have received training in bank technical skills, and
six (6) also indicated having had courses in conceptual management
theor ies . Five (5) have been coached, three (3) have had problem-
solving training, three (3) have had job rotation, and one each have had
T-group or sensitivity training, continuing education, and communi-
cation skill training. None of the managers have had motivation skill
training or leadership skill training.
95
TABLE XIV
COMPETENCY AREAS IN WHICH INTERVIEWEES HAVE RECEIVED TRAINING
Managers Have Received Number That Received Training in: Training
In-house training 7 Bank technical skills 6 Conceptual management theories 6 Coaching 5 Decision-making/problem-solving 3 Job rotation 3 T - gro up / s ens it ivity 1 Communication skill 1 Continuing education program 1 Motivation skill 0 Leadership skill 0
^Interviewees N=10; Headquarters N=7 as follows: President , three Department Heads and three Assistant Heads. Branch N=3 as follows: General Manager and two Assistant Managers.
With re fe rence to the r e sea rch question, it can be seen f rom
the table that many of the managers interviewed have not had training
in some of the skills considered necessary for managerial decentral i -
zation. These a reas and the number of managers who indicated they
have had training include: leadership-0, motivation-O, communication-
1, T-group/sensi t ivi ty training-1, decision-making/problem-solving-
3. These are indeed very small proportions.
The fifth resea rch question is "what general management com-
petencies do the bank managers consider necessary for managerial
decentral izat ion?" Table XV, page 96, presents the data relevant to
96
TABLE XV
COMPETENCIES FOR MANAGERIAL DECENTRALIZATION ACCORDING TO INTERVIEWED BANK B MANAGERS
Weighted Very Average Not Ranking Score Important Importance Important
Motivation 20 10 0 0 Communication 20 10 0 0 Problem-solving 20 10 0 0 Leadership 19 9 1 0 Training skill 18 8 2 0 Administration 16 6 4 0 Decisiveness 16 6 4 0 Technical skill 16 7 2 1 Conflict resolution 13 4 5 1 Aggressiveness 5 0 5 5
'•'Interviewees N=10; Headquarters N=7 as follows: President , three Department Heads and three Assistant Heads. Branch N=3 as follows: General Manager and two Assistant Managers.
this question. The table presents the data concerning the competen-
cies the interviewed bank managers consider necessary for managerial
decentralization.
As can be seen f rom the above table, all the interviewed bank
managers in Bank B felt that motivation, communication, problem-
solving a re very important competencies for managerial decentral i -
zation. Nine (9) of the ten managers interviewed thought that
leadership skill is very important, eight (8) thought that training skill
is very important, six (6) thought that administrative skill is very
important, and six (6) thought that decisiveness is very important.
97
Other skills thought to be very important, and the number of managers
thinking so a re technical skill (7), and conflict resolution skill (4).
The competencies considered to be of average importance and
the number of managers thinking so are : leadership (1), training (2),
administrative (4), decisiveness (4), technical skill (2), conflict r e -
solution (5), and aggressiveness (5). Among the skills considered to
be unimportant for managerial decentralization and the number of
managers who have that opinion a re : technical skill (1), conflict r e -
solution (1), and aggressiveness (5).
With re fe rence to the r e sea rch question, the i tems considered
most important for managerial decentralization by the major i ty of
the managers interviewed a re those abilities relat ing to organizational
behavior: motivation, communication, problem-solving, leadership
and training skil ls .
The sixth r e sea rch question is "how may the needed compe-
tencies best be developed?" Tables XVI and XVII present the data
pertinent to this question. Table XVI, page 98, presents the data con-
cerning the programs upon which the interviewed managers of Bank B
considered emphasis should be placed for developing the compe-
tencies necessary for managerial decentralization. Table XVI will be
discussed f i r s t .
As can be seen f rom the table, nine (9) of the ten managers
interviewed thought that courses in management theory should be much
98
TABLE XVI
PROGRAMS FOR DEVELOPING COMPETENCIES FOR DECENTRALIZATION ACCORDING TO BANK B
MANAGERS INTERVIEWED*
Ranking Weighted
Score Much Emphasis
Little None Courses in management theory 19 9 1 0 Meetings and conferences 18 8 2 0 Decision-making 18 8 2 0 Motivation 17 7 3 0 In-house training 17 7 3 0 T-group/sensi t iv i ty training 14 4 6 0 Coaching 14 4 6 0 University executive development 14 5 4 1 Job rotation 12 4 4 2 Continuing education 9 1 7 2
^Interviewees N=10; Headquarters N=7 as follows: President , three Department Heads and three Assistant Heads. Branch N=3 as follows: General Manager and two Assistant Managers^
emphasized in developing the necessary competencies for managerial
decentralization. Other programs considered to be needing much em-
phasis and the number of managers of that opinion a re : meetings and
conferences (8), decision-making (8), motivation (7), in-house t ra in -
ing (7), T-group/sensi t ivi ty training (4), coaching (4), university
executive development (5), job rotation (4), and continuing education
(1).
Among the programs considered to be needing only little em-
phasis and the number managers of that opinion are : courses in
management theory (1), meetings and conferences (2), decision-
99
making (2), motivation (3), in-house training (3). Others a re T-group/
sensitivity training (6), coaching (6), university executive development
(4), job rotation (4), and continuing education (7).
Five managers felt that three of the programs should not be
emphasized. These programs and the number of managers of this
opinion a re : university executive development (1), job rotation (2),
and continuing education (2).
Table XVII, page 100, presents the data concerning the opinions
of the interviewed bank managers as regards to the subjects they think
should be emphasized in university curriculum for management de-
velopment.
As can be seen f rom the table, nine (9) of the ten managers
thought that management/administrat ion, analytical problem-solving,
and business policy formulation should receive much emphasis in man-
agement development. Other subjects considered to be needing much
emphasis and the number of managers of such opinion are : motivation
(8), communication skill (7), human relations (7), organization be-
havior (7), finance (5), operations (5), psychology (6), marketing (5),
sociology (3), accounting (3), and computer science (3).
Only one (1) manager considered each of the following to be
needing little emphasis: management/administrat ion, problem-solving,
and business policy formulation. Motivation was thought to be need-
ing only Little emphasis by 2 managers , communication 3 mana-
100
TABLE XVII
SUBJECTS TO EMPHASIZE IN UNIVERSITY CURRICULUM FOR MANAGEMENT DEVELOPMENT ACCORDING
TO INTERVIEWEES
Ranking Weighted
Score Much Emphasis
Little None Management/Administration 19 9 1 0 Analytical problem-solving 19 9 1 0 Business policy formulation 19 9 1 0 Motivation 18 8 2 0 Communication skill 17 7 3 0 Human relat ions 17 7 3 0 Organization behavior 17 7 3 0 Finance 15 5 5 0 Operations 15 5 5 0 Psychology 15 6 3 1 Marketing 15 5 5 0 Sociology 13 3 7 0 Accounting 13 3 7 0 Computer Science 13 3 7 0
X I . 4 . W V J . v i v r v v v u i.-* J - v r , i l i V / i O J-X I C X O Li-V^l W O , JL ± C O J L U C 1 X I
three Department Heads and three Assistant Heads. Branch N = 3 as follows: General Manager and two Assistant Managers.
gers , human relat ions 3 managers , and organization behavior 3 mana-
gers . Others considered to require only little emphasis and the
number of managers of such opinion are : finance (5), operations (5),
psychology (3), marketing (5), sociology (7), accounting (7), and com-
puter science (7). Only one (1) manager thought that psychology
should not be emphasized.
101
Summary
Bank B is a government owned bank and has a divisionaiized
organizat ion s t r uc tu r e . Its branches a r e supervised and co-ordinated
by four geographic divisions called "Area Head Of f i ces" . The com-
pany has wri t ten s ta tements of purpose, goals, and policies and i ts
manage r s a r e well aware of the exis tence of these wri t ten s t a t ements .
The bank has no decentra l izat ion policy. Most of the manage r s i n t e r -
viewed fee l that top management does not support decentra l iza t ion,
that the i r subordinates do not par t ic ipate in the determinat ion of work
and pe r fo rmance s tandards , and that decisions a r e not made where the
opera t ions take place. This situation indicates a s eve re lack of de le-
gation, part icipat ion, and decentra l izat ion.
This s eve re centra l izat ion is also evidenced by the fact that
decisions like goal formulat ion, policies, budgets, product design, and
action plans a r e made exclusively by the top management . This is a
highly bureaucra t i c organizat ion. It should be r eca l l ed , however , that
th is bank is government owned and the profit motive is not a s t rong
fac tor in its operat ion.
The president of the bank sees the bank 's environment as not
necessa r i ly demanding a decentra l ized organizat ion s t r u c t u r e . A high
percentage (67 percent) of the r e s p o n s e s f r o m the manage r s interviewed
at th is bank indicate a negative manager ia l at t i tude toward the i r sub-
ord ina tes ' ability and willingness to work, to par t ic ipate effect ively
102
in decision-making, and to carry out delegated responsibilities ef-
fectively.
103
Case Study—Bank C
General Information
Name of Bank: Bank C
Number of Branches: 68
Date of Interview: January, 1981
Ownership: 100 percent public and state government
Total Asset Size: N 650 million (about $1. 2 billion)
Type of Bank: Commercial
Number of Employees: 3000
The f i r s t r e sea rch question is "what is the status of managerial
decentralization in the selected banks?" Tables XVIII and XIX present
the data pertinent to this question. Table XVIII, page 104, presents
the data concerning statements of purpose, goals, policies, and decen-
tral ization and will be discussed f i r s t .
As can be seen f rom Table XVIII, all seven (7) headquarter in-
terviewees indicated that there is a written statement of policies.
Regarding written statements of shor t - range goals, the distribution is
5 "yes" and 2 "no". They were as evenly divided as possible con-
cerning written statement of long-range goals (4 "yes" and 3 "no").
Concerning the remaining i tems in the table, all the seven (7) head-
quarter interviewees indicated that the bank does not have a policy to
grant operational autonomy to the branches and departments. As r e -
TABLE XVIII
MANAGERS' KNOWLEDGE OF INFORMATION AND MANAGERS' DELEGATION PRACTICES
IN BANK C
104
Head l-quari ters Branch To' bai
Questions Yes No Yes No Yes No Does the bank have written statements of the following:
Purpose or mission 5 2 1 2 6 4 Long range goals 4 3 1 2 5 5 Policies 7 0 3 0 10 0 Short range goals 5 2 1 2 6 4
Does the bank have policy to grant operation autonomy to the branches and departments? 0 7 0 3 0 10 Does top management support de-centralization? 3 4 0 3 3 7 Do your subordinates participate in determining work and performance standards ? 2 5 1 2 3 7 Are decisions made where the operation takes place? 3 4 0 3 3 7
Responses5
^Interviewees N=10; Headquarters N=7 as follows: President , five Department Heads and two Assistant Heads. Branch N=3 as fol-lows: General Manager and two Assistant Managers.
gards top management support for decentralization, three (3) felt top
management supports it and four (4) felt top management does not
support it. As regards subordinate participation in determining
work and performance standards, the responses a re 2 "yes" and 5
"no". Three (3) interviewees thought that decisions a re made where
105
the operations take place and the other four (4) thought that decisions
a re not made where the operations take place.
When responses of the three (3) branch interviewees a re
examined, it is seen that the distribution is the same for whether the
bank has written statement of purpose, written statement of long-range
goals and written statement of short-range goals (1 "yes" and 2 "no")
in each case. As regards to whether the bank has written statement
of policies, the three interviewees said "yes". Concerning the r e -
sponses of the branch personnel to other i tems, all three (3) branch
interviewees indicated that the bank has no policy to grant operational
autonomy to the branches and departments, that top management does
not support decentralization, and that decisions are not made where the
operations take place. However, one (1) of the three (3) interviewees
indicated that subordinates participate in determining work and pe r -
formance standards. The other two (2) indicated that subordinates do
not participate in determining work and performance s tandards.
When the totals for all the ten (10) interviewees a re examined,
the responses a re 6 "yes" and 4 "no" in each case for whether the
bank has written statements of purpose and for whether the bank has
written statements of shor t - range goals. All the ten (10) interviewees
indicated that the bank has written statements of policies. The r e -
sponses a re evenly divided concerning whether the bank has written
statements of long-range goals (5 "yes" and 5 "no"). All the ten (10)
106
managers indicated that the bank has no policy to grant operation
autonomy to the branches and departments. The responses are 3 "yes"
and 7 "no" concerning top management support of decentralization, it
is 3 "yes" and 7 "no" as regards to subordinate participation in de te r -
mining work and performance standards and it is 3 "yes" and 7 "no"
in answer to whether decisions a re made where the operation takes
place.
Regarding the f i r s t r e sea rch question—"what is the status of
managerial decentralization in the selected banks?"--a significant
proportion of the managers interviewed lack the knowledge of the
existence of vital information concerning their bank. In examination
of the totals , seven (7) of the ten (70 percent) interviewed indicated
that top management does not support decentralization. Seventy pe r -
cent also indicated that decisions a re not made where the operation
takes place. Other i tems that determine whether or not decentral i -
zation exists indicate that it is simply not there .
Table XIX, page 107, presents a linear responsibili ty chart to
show who makes what decisions and to show how far down in the o r -
ganization certain decisions a re delegated.
As can be seen by examination of the table, the board of d i rec-
to r s approves decisions concerning long-range goals, shor t - range
goals, policies, budgets, product design (services) , loans and invest-
ments. It also develops long-range goals, policies, and budgets.
107
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108
The president of the bank initiates the following decisions and
activities: long-range goals, policies, short-range goals, control
measures, product design, performance evaluation, and action plans.
The president approves short-range goals, budgets, controls, product
design, performance evaluation, action plans, action plans, and loans.
He participates in the development of long-range goals and policies
and provides input in investment.
The vice president participates in the development of long-
range goals, policies, short-range goals, controls, and action plans.
They provide input in budgets, product design, and investments. They
initiate product design, performance evaluation, and action plans, and
they approve performance evaluations and loans.
Management committees develop policies, controls, product
design, and action plans. They also initiate action plans.
Department heads provide inputs in controls and action plans.
They initiate, develop, and approve performance evaluations, and they
approve loans.
Regional and area managers provide inputs in controls and
action plans, and they initiate performance evaluations and approve
loans.
109
Branch managers and supervisors provide input in control ac-
tivit ies, they provide input in performance evaluations and also in
action plans. The branch manager approves loans.
With re fe rence to the major r e sea rch question--"what is the
status of managerial decentralization in the selected banks?" - - i t can
be seen that although four authority a reas : controls, performance
evaluations, actions plans, and loans a re fa i r ly well delegated far
down the organizational ladder, approval in some of these a reas is
still reserved for the top hierarchy.
The second resea rch question is "what a re the variables that
influence decentralization in the selected banks?" Table XX, page
110, presents the data pertinent to this r e sea rch question. The table
presents an a r r ay of situational variables existing in the bank's en-
vironment and having an impact on its s t ructura l decisions.
As the table shows, the variables that a re pulling the organi-
zation towards managerial decentralization are : competition, geo-
graphic dispersion of branches, growth and s ize, the nature of the
market and the r u r a l banking scheme. The situational variables that
a re seen to be pulling against decentralizing a re scarci ty of skilled man-
agers and government ownership of interest . The enterpr ises promotion
decree has no effect on the structuring of the organization. Sixty-three
percent of the variables presented a re seen to be pulling the o r -
110
TABLE XXI
FACTORS AFFECTING DECENTRALIZATION IN BANK C*
Variables Centralize Decentralize No-effect Competition X Scarcity of skilled managers X Geographic dispersion X Growth (size) X Government regulations:
1. Rural banking scheme X 2. Enterpr i ses promotion
decree X Government participation X Nature of the market X
2 or 25% 5 or 63% 1 or 12% ^Source of Data: the President of Bank C
ganization toward decentralizing, 25 percent is pulling it away f rom
decentralizing and 12 percent has no effect on the design decision.
The third r e sea rch question is "what a re the attitudes of the
bank managers toward decentralization of decision-making?" Table
XXII, page 111, presents the data pertinent to this r esea rch question.
The table presents data concerning the perception of the bank mana-
gers toward their subordinates ' willingness and ability to work and to
handle tasks involving self -direct ion and decision-making. The table
consists of six pairs of statements, the statements marked "X" a re
assumed to be negative towards man 's willingness and ability to work.
Those marked "Y" are assumed to be positive.
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As can be seen by examination of Table XXII, in the f i r s t pair
of s tatements, six (6) interviewees felt that people do not real ly like
to work while four (4) felt that people want to contribute toward mean-
ingful goals which they have helped to establish. The same distribution
is seen in the second pair: six (6) indicate that only few of their sub-
ordinates can handle work requiring creativity, se l f -d i rec t ion, and
self-control , while four (4) indicate that most of their subordinates can
exercise far more responsibili ty, self-direction, and self-control than
their present job demands. In the third and sixth pairs of statements,
the distribution is seven (7) for the "X" statements and three (3) for
the "Y" statements. In the fourth pair , eight (8) interviewees felt
that the manager must establish detailed work routines and procedures
and enforce them f i rmly but fair ly, the remaining two (2) interviewees
identified with the statement that the manager must encourage full
participation on important mat ters to broaden subordinate se l f -
direction and control, and thus aid in management development. In the
fifth pair, eight (8) interviewees felt that people will Love to work if
pay is decent and the boss is fa i r , then productivity and efficiency will
increase . Two (2) felt that expanding subordinate autonomy and par t i -
cipation will lead to improvements in operating efficiency, and produc-
tivity.
With re ference to the third r e sea rch question--"what is the
attitude of the bank managers toward decentralization of decision-
113
making?"- - i t can be seen that a Large major i ty of the managers in ter-
viewed identified with the "X" statements assumed to be negative
towards man's willingness and ability to work, to exercise self-control
and to handle tasks requiring decision-making. As much as 70 percent
of the responses identified with the "X" statements. This, indeed, im-
plies that the task of selling the idea of decentralization and delegation
will be a very difficult one.
The fourth r e sea rch question is "what training, if any, have
bank managers had in the skills needed for decentral izat ion?" Table
XXIII, page 114, presents the data pertinent to this question. The
table presents data concerning the skills in which interviewed managers
have received training.
As the table shows, eight (8) of the ten managers interviewed
have had some type of bank technical training. Seven (7) have had
in-house training, five (5) have had conceptual management theories ,
three (3) have had job rotation, and two (2) have had coaching. None
of those interviewed has had T-group training, communication,
decision-making, leadership, and continuing education.
114
TABLE XXIII
COMPETENCY AREAS IN WHICH INTERVIEWEES HAVE RECEIVED TRAINING
Managers Have Received Number That Received Training in: Training
Bank technical training 8 In-house training 7 Conceptual management theories 5 Job rotation 3 Coaching 2 T-group training 0 Communication 0 Decision-making 0 Leadership 0 Continuing education 0
'•'Interviewees N=10; Headquarters N=7 as follows: President , five Department Heads and two Assistant Heads. Branch N=3 as follows: the General Manager and two Assistant Managers.
The fifth r e sea rch question is "what general management com-
petencies do the bank managers consider necessary for managerial
decentral izat ion?" Table XXIV, page 115, presents the data pertinent
to this question. The data concerns the competencies the interviewed
bank managers consider necessary for managerial decentralization.
As the table shows, all the ten (10) interviewed Bank C mana-
gers thought that problem-solving skill is very important. Other
competencies thought to be very important and the number of managers
holding that opinion a re : motivational skill (9), leadership skill (9),
115
TABLE XXIV
COMPETENCIES FOR MANAGERIAL DECENTRALIZATION ACCORDING TO INTERVIEWED BANK C MANAGERS
Weighted Very Average Not Ranking Score Important Importance Important
Analytical problem-solvinj g 20 10 Motivational skill 19 9 1 Leadership skill 19 9 1 Training skill 18 8 2 Communication skill 18 8 2 Administration 18 8 2 Decisiveness 17 7 3 Technical skill 15 5 5 Aggressiveness 14 6 2 2 Conflict resolution skill 14 4 6
^Interviewees N=10 i; Headquarters N=7 as follows: ] President, five Department Heads and two Assistant Heads. Branch N=3 as follows: the General Manager and two Assistant Managers.
training (8), communication (8), administration (8), decisiveness (7),
technical (5), aggressiveness (6), and conflict resolution (4).
Competencies considered to be of average importance and the
number of managers of that view are : motivational (1), leadership
(1), training (2), communication (2), administration (2), decisiveness
(3), technical (5), aggressiveness (2), and conflict resolution (6). Two
(2) managers thought that aggressiveness is not an important compe-
tency for managerial decentralization.
The sixth r e sea rch question is "how may the needed compe-
tencies be developed?" Tables XXV and XXVI present the data pertinent
to this question. Table XXV, page 116, presents the data pertaining
116
TABLE XXV
PROGRAMS FOR DEVELOPING COMPETENCIES FOR DECENTRALIZATION ACCORDING TO BANK C
MANAGERS INTERVIEWED*
Weighted Emphasis Ranking Score Much Little None
In-house training 20 10 Meetings and conferences 20 10 Courses in management theory 20 10 Decision-making workshop 20 10 Motivation skill program 18 8 2 University executive development 17 7 3 Coaching 15 6 3 1 T-group/sensi t ivi ty training 12 2 8 Job rotation 12 2 8 Continuing education
•J. . . ~ 1 _ LT ' _ 1 ^ 1
11 3 5 2
five Department Heads and two Assistant Heads. Branch N = 3 as follows: the General Manager and two Assistant Managers.
to the programs the interviewed managers think should be emphasized
in developing competencies necessary for managerial decentralization.
Table XXV will be discussed f i r s t .
As can be seen in the table, all the ten (10) managers in ter -
viewed in this bank felt that much emphasis shouLd be placed on the
following a reas for the development of the competencies necessary for
decentralization: in-house training, meetings and conferences,
courses in management theory, and decision-making workshops. Other
programs upon which much emphasis needs to be placed and the num-
ber of managers of that view a re : motivation skill program (8),
117
university executive development program (7), coaching (6), T-group/
sensitivity training (2), job rotation (2), and continuing education (3).
P rograms deserving only little emphasis and the number of
managers having this viewpoint are : motivation skill program (2),
university executive development program (3), T-group/sensi t ivi ty
program (8), job rotation (8), and continuing education (5). One mana-
ger felt that coaching needs not be emphasized and two managers felt
that no emphasis should be placed on continuing education.
Table XXVI, page 118, presents the data concerning the
opinions of the interviewed bank managers as regards to the subjects
they think should be emphasized in the university curriculum for man-
agement development.
According to the table, all the ten (10) managers interviewed
in Bank C think that much emphasis should be given to the following
for management development: management/administrat ion, business
policy formuLation and analytical problem-solving. Other subjects
considered to be needing much emphasis and the number of managers
of that opinion are : motivation (9), communication (8), human
relations (8), organization behavior (8), finance (5), operations man-
agement (5), marketing (4), accounting (4), computer science (3), and
psychology (1).
118
TABLE XXVI
SUBJECTS TO EMPHASIZE IN UNIVERSITY CURRICULUM FOR MANAGEMENT DEVELOPMENT ACCORDING
TO INTERVIEWEES*
Weighted Emphasis Ranking Score Much Little None
Management /Administration 20 10 Business policy formulation 20 10 Analytical problem-solving 20 10 Motivation 19 9 1 Communication skill 18 8 2 Human relations 18 8 2 Organization behavior 18 8 2 Finance 15 5 5 Operations 15 5 5 Marketing 14 4 6 Accounting 14 4 6 Computer Science 13 3 7 Psychology 11 1 9 Sociology 10 10
five Department Heads and two Assistant Heads. Branch N=3 as follows: the General Manager and two Assistant Managers.
Subjects considered to be needing only little emphasis and the
number of managers holding such opinions a re : motivation (1), com-
munication (2), human relations (2), organization behavior (2), finance
(5), operations management (5), marketing (6), accounting (6), computer
science (7), psychology (9), and sociology (10).
119
Summary
Bank C is a commercial bank with a divisionalized organization
structure. It has written statements of purpose, goals, and policies.
Although a majority of the interviewed managers are aware of the
existence of this information, some indicated lack of knowledge of the
written statements. The bank does not have a decentralization policy.
Most of the interviewed managers indicated that top management does
not support decentralization, that their subordinates do not participate
in the determination of work and performance standards, and that de-
cisions are not made where the operation takes place. This situation
indicates a lack of in-depth participation of middle and lower level
managers and subordinates. The branch and department managers,
however, participate in decisions concerning control measures, per-
formance evaluations, actions plans, and loan approval. The manage-
ment situation here is that of supervision and control from the
headquarters. The branches are weak and do not have the authority to
make decisions pertaining to its operations.
Bank C president indicated that environmental factors Like com-
petition, the geographic dispersion, its bank structure, growth and
size, government regulations, and other market conditions call for a
decentralized bank structure. Most of the managers interviewed at
Bank C, however, have a negative attitude toward decentralization.
120
Case Study--Bank D
General Information
Name of Bank: Bank D
Number of Branches: 120
Date of Interview: December, 1980
Ownership: 50 percent public, 30 percent foreign, 20 percent
government
Total Asset Size: N 1 billion ($1.9 billion)
Type of Bank: Commercial
Number of Employees: 4500
The f i r s t r e sea rch question is "what is the status of managerial
decentralization in the selected banks?" Tables XXVII and XXVIII
present the data pertinent to this question. Table XXVII, page 121,
presents the data concerning statements of purpose, plans, policies
and decentralization and will be discussed f i r s t .
As can be seen by examination of the table, at the headquarters
level three (3) interviewees indicated that the bank has written s ta te-
ments of purpose and four (4) indicated that the bank has no such s ta te-
ments. Five (5) managers indicated that the bank has written
statements of long-range goals and two (2) indicated that it does not
have such written statement. Six (6) indicated it has written statements
of shor t - range goals and one (1) said that the bank does not have such
TABLE XXVII
MANAGERS' KNOWLEDGE OF INFORMATION AND MANAGERS' DELEGATION PRACTICES
IN BANK D
121
Responses Head quar ;ers Branch Total
Questions Yes No Yes No Yes No Does the bank have written statements of the following:
Purpose or mission 3 4 1 2 4 6 Long range goals 5 2 1 2 6 4 Policies 7 0 3 0 10 0 Short range goals 6 1 1 2 7 3
Does the bank have policy to grant operational autonomy to the branches and departments? 7 0 3 0 10 0 Does top management support de-centralization? 4 3 2 1 6 4 Do your subordinates participate in determining work and performance standards ? 5 2 1 2 6 4 Are decisions made where the operation takes place? 4 3 2 1 6 4
^Interviewees N=10; Headquarters N= 7 as i follows: President ,
Branch Manager and two Assistant Managers.
:3 as follows:
written statements. All the seven (7) headquarter interviewees indi-
cated that the bank has written statements of policies. Concerning the
other i tems, all seven (7) headquarter interviewees indicated that the
bank has a policy to grant operational autonomy to the branches and
departments. Only four (4) of the interviewees felt that top manage-
ment supports decentralization. Three (3) interviewees felt that top
management does not support decentralization. Five (5) of the mana-
122
gers allow subordinate participation in the determination of work and
performance standards. Two (2) does not allow such participation.
Four (4) said that decisions are made where the operation takes place
and three (3) said that decisions are not made where the operation
takes place.
When the responses of the branch interviewees a re examined,
it is seen that the distribution is 1 "yes" and 2 "no" in each case to
the following questions: Does the bank have written statement of
purpose? Does the bank have written statement of long-range goals?
Does the bank have written statement of shor t - range goals? Ail th ree
(3) of the interviewees indicated that the bank does have written s ta te-
ment of policies. With regard to other i tems, all three (3) interviewees
indicated that the bank has policy to grant operational autonomy to the
branches and departments. Two (2) branch interviewees indicated
that top management supports decentralization and the third indicated
that top management does not support decentralization. One (1) in ter -
viewee allows subordinate participation in work and performance
decisions and two (2) do not allow such subordinate participation. Two
(2) of the three managers indicated that decisions a re made where the
operation takes place. One (1) indicated that decisions a re not made
where the operation takes place.
When the totals for all ten (10) interviewees are examined, it
is seen that the response is 4 "yes" and 6 "no" with regard to whether
123
the bank has written statement of purpose. It is 6 "yes" and 4 "no"
with regard to written statement of iong-range goals and it is 7 "yes"
and 3 "no" with regard to written statements of short-range goals. Ail
the ten (10) interviewees indicated that the bank has written statements
of policies. Ail ten (10) managers also said that the bank has policy
to grant operational authority to the branches and departments. As
regards to the rest of the items, the distribution of response is iden-
tical 6 "yes" and 4 "no" in each case to the questions of whether top
management supports decentralization, whether subordinates partici-
pate in determining work and performance standards, and whether
decisions are made where the operation takes place.
With reference to the f i rs t research question--"what is the
status of managerial decentralization in the selected banks?"--
although the bank has policy to grant operational autonomy to the
branches and departments, 40 percent of the interviewees indicated
that top management does not support decentralization, 40 percent
feel that decisions are not made where the operation takes place and
40 percent do not allow subordinate participation in decisions concern-
ing their work.
Table XXVIII, page 124, presents a linear responsibility chart
to show who makes what decisions and how far down in the organiza-
tion some decision-making authorities are delegated.
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As can be seen by examination of Table XXVIII, the board of
directors approves long-range goals, policies, short-range goals,
budgets, product design (services), loans, and investments. They also
develop long-range goals and budgets. They initiate product designs.
The president of the corporation approves policies, short-
range goals, budgets, controls, product design, performance eval-
uation, action plans, and loans. The president initiates long-range
goals, policies, short-range goals, budgets, controls, product design,
and action plans. He provides input in investments.
The vice-president initiates controls, product design, perfor-
mance evaluation, and action plans. He approves loans and performance
evaluations. He develops performance evaluation criteria and action
plans, and he provides input in long-range goals, policies, short-
range goals, budgets, controls, product design, and investments.
Management committees help in the development of policies,
short-range goals, controls, product design, performance evaluation,
and action plans. They provide input in budgeting matters, and they
initiate product designs and action plans.
Department heads provide inputs in controls, and in action
plans. They initiate, develop, and approve performance evaluations.
They also approve loans. Regional and area heads provide inputs in
126
controls and in action plans. They initiate performance evaluations
and approve loans.
Branch managers and supervisors provide inputs in controls,
performance evaluations, and action plans. Branch managers have the
authority to approve limited amount of loans.
To determine the status of managerial decentralization, as the
research question calls for, the extent of delegation of the authorities
would have to be considered. It can be seen that decisions concerning
goals, policies, budgets and product design are made without the inputs
of the lower-middle and lower management. The decentralized authori-
ties are control, performance evaluation, action plans, and loans.
The situation is not very bad.
The second research question is "what are the variables that
influence decentralization in the selected banks?" Table XXIX, page
127, presents the data concerning the situational variables that affect
bank management decisions to decentralize or centralize its operations.
As the table shows, the situational factors that are pulling the
organization towards managerial decentralization are competition,
geographic decentralization of physical structure, growth and size,
the rura l banking scheme, and the nature of the market. The factors
that are seen to be pulling towards centralization are scarcity of
skilled managers and government participation in equity. 63 percent
127
TABLE XXIX
FACTORS AFFECTING DECENTRALIZATION IN BANK D*
Variables Centralize Decentralize No-effect Competition X Scarcity of skilled managers X Geographic dispersion X Growth (size) X Government regulations:
1. Rural banking scheme X 2. Ente rpr i ses promotion
decree X Government participation X Nature of the market X
3 or 37% 5 or 63% *Source of Data: the President of Bank D
of the factors presented a re seen to be pulling the organization towards
continued managerial decentralization and 37 percent of the factors
favor a centralized s t ructure .
The third r e sea rch question is "what a re the attitudes of the
bank managers toward decentralization of decision-making?" Table
XXX, page 128, presents the data for this question. The table pre -
sents data concerning the perception and attitude of the bank managers
toward their subordinates ' willingness and ability to work and to handle
tasks involving self-control and decision-making. The table contains
six pairs of s tatements, the statements marked "X" a re assumed to be
negative toward man's ability and willingness to work and to handle
tasks involving decision-making. Those marked "Y" a re assumed to
be positive.
128
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As can be seen by examination of Table XXX, six (6) inter-
viewees identified with the "X" statement "people don't real ty like to
work" in the f i r s t pair of s tatements. Four (4) think that people want
to contribute toward meaningful goals they have helped to establish.
In the second pair of statements, six (6) interviewees agreed with the
"Y" statement that most of their subordinates can exercise fa r more
responsibili ty, se l f -direct ion, and self-control than their present jobs
demand. Four (4) thought that only few of their subordinates can
handle work requiring creativity, se l f -di rect ion, and self-control . In
the third pair of s tatements, the responses a re evenly divided (5 "X"
and 5 "Y") between those who said that the manager ' s basic task is to
closely supervise and control his subordinates and those who said
that the manager ' s task is to create an environment which will enable
members to contribute to the limits of their ability. In the fifth pair
of s tatements, eight (8) interviewees agree that people will love to
work if pay is decent and the boss is f a i r , then productivity and
efficiency will increase. Two (2) on the other hand, agreed that ex-
panding subordinate autonomy and participation will lead to improve-
ments in operating efficiency and productivity. In the sixth pair of
s tatements, six (6) interviewees indicated that they do not have
confidence that their subordinates will ca r ry out delegated respons i -
bilities effectively. Four (4) indicated that they do have confidence
that subordinates will ca r ry out delegated responsibil i t ies effectively.
130
In determining the general attitude of the managers toward
decentralization of decision-making, as the third r e sea rch question
calls for , it can be seen that 60 percent of the responses were in
agreement with the "X" statements which were assumed to be negative
toward man's willingness and ability to handle tasks requir ing se l f -
control (independence) and decision-making. Only 40 percent of the
responses agreed with the "Y" statements assumed to be positive.
The fourth r e sea rch question is "what training, if any, have
bank managers had in the skills needed for decentral izat ion?" Table
XXXI, page 131, the data pertinent to this question. The table pre-
sents data concerning the skills in which interviewed managers have
received training.
As Table XXXI shows, seven (7) of the ten managers in ter-
viewed have received some type of in-house training, six (6) have
received bank technical skill training, five (5) have been coached, four
(4) have had job rotat ion, and four (4) have had conceptual management
theor ies . Three (3) have undergone decision-making training and one
(1) has been trained in communication skills. None of the managers
interviewed has had training in motivation, T-group/sensi t ivi ty ,
leadership, or in continuing education.
With re fe rence to the fourth r e sea rch question, it can be seen
that the managers interviewed have not had training in some of the
131
TABLE XXXI
COMPETENCY AREAS IN WHICH INTERVIEWEES HAVE RECEIVED TRAINING
Managers Have Received Number That Received Training in: Training
In-house training 7 Bank technical skills 6 Coaching 5 Job rotation 4 Conceptual management theories 4 Decision-making 3 Communication 1 Motivation skill 0 T-group/sensi t iv i ty training 0 Leadership skills 0 Continuing education 0
^Interviewees N = 10; Headquarters N=7 as follows: President , six Department and Unit Heads. Branch N = 3 as follows: Branch Manager and two Assistant Managers.
a reas considered necessary for managerial decentralization. These
a reas a re motivation skill, communication skill, T-group/sensi t iv i ty
training, and leadership skil ls .
The fifth r e sea rch question is "what general management com-
petencies do the bank managers consider necessary for managerial
decentral izat ion?" Table XXXII, page 132, presents the data relevant
to this question. The table presents the data concerning the compe-
tencies the interviewed bank managers consider necessary for
managerial decentralization.
As can be seen f rom Table XXXII, all the ten (10) interviewed
132
TABLE XXXII
COMPETENCIES FOR MANAGERIAL DECENTRALIZATION ACCORDING TO INTERVIEWED BANK D MANAGERS
Weighted Very Average Not Ranking Score Important Importance Important
A dministration 20 10 Analytical problem-solvin y 20 10 Leadership 20 10 Decisiveness 19 9 1 Communication 19 9 1 Motivation 18 8 2 Technical skill 18 8 2 Aggressiveness 18 8 2 Conflict resolution 17 7 3 Training skill 16 6 4
six Department and Unit Heads. Branch N=3 as follows: Branch Manager and two Assistant Managers.
managers indicated that administrative analytical problem-solving,
and leadership skills a r e very important for managerial decentral i-
zation. Other competencies considered to be very important and the
number of interviewees of such opinions are: decisiveness (8), tech-
nical skill (8), aggressiveness (8), conflict resolution (7), and
training (6). Competencies considered to be of average importance
and the number of managers of that opinion are as follows: decisive-
ness (1), communication (1), motivation (2), technical skills (2),
aggressiveness (2), conflict resolution (3), and training skill (4).
The sixth r e sea rch question is "how may the needed compe-
tencies best be developed?" Tables XXXIII and XXXIV present the
133
data pertinent to this question. Table XXXIII will be presented f i r s t .
Table XXXIII presents the data concerning the programs upon which
emphasis should be placed for the development of the competencies
necessary for managerial decentralization according to the interviewed
managers .
TABLE XXXIII
PROGRAMS FOR DEVELOPING COMPETENCIES FOR DECENTRALIZATION ACCORDING TO BANK D
MANAGERS INTERVIEWED*
Ranking Weighted
Score Much Emphasis
Little None Meetings and conferences 20 10 Courses in management theory 20 10 In-house training 20 10 Decision-making workshop 20 10 University executive program 19 9 1 Motivation 17 7 3 Coaching 16 6 4 Continuing education 14 4 6 T-group/sensi t ivi ty training 12 2 8 Job rotation 11 1 9
' 'Interviewees N=10; Headquarters N=7 as follows: President , six Department and Unit Heads. Branch N=3 as follows: Branch Manager and two Assistant Managers.
As can be seen f rom the table, all the ten (10) interviewed
Bank D managers thought that the following programs should be em-
phasized: meetings and conferences, courses in management theories ,
in-house training, and decision-making workshop. Other programs
thought to be needing much emphasis and the number of managers of
134
that opinion a re : university executive development program (9),
motivation training (7), coaching (6), continuing education (4), T-group/
sensitivity training (2), and job rotation (1).
P rograms thought to be needing only little emphasis and the
number of managers of this opinion are : university executive develop-
ment program (1), motivation skill training (3), coaching (4),
continuing education (6), T-group/sensi t ivi ty training (8), and job
rotation (9).
Table XXXIV, Page 135, presents the data concerning the
opinions of the interviewed bank managers as regards to the subjects
they think should be emphasized in university curriculum for manage-
ment education.
As can be seen f rom the table, all the ten (10) interviewed
managers thought that the following subjects should be emphasized in
the university curriculum for management education: management/
administration, business policy formulation, and problem-solving.
Other subjects that need to be emphasized and the number of managers
that thought so a re : communication skills (9), human relations (9),
motivation skills (9), organization behavior (8), operations manage-
ment (7), finance (6), marketing (5), accounting (4), computer science
(3), psychology (3), and sociology (2).
Many other managers thought that the above subjects deserve
only little emphasis in management education. These subjects and the
135
TABLE XXXIV
SUBJECTS TO EMPHASIZE IN UNIVERSITY CURRICULUM FOR MANAGEMENT DEVELOPMENT ACCORDING
TO INTERVIEWEES*
Weighted Emphasis Ranking Score Much Little None
Management /Administration 20 10 Business policy formulation 20 10 Analytical problem-solving 20 10 Communication skill 19 9 1 Human relat ions 19 9 1 Motivation skills 19 9 1 Organization behavior 18 8 2 Operations management 17 7 3 Finance 16 6 4 Marketing 15 5 5 Accounting 14 4 6 Computer science 13 3 7 Psychology 13 3 7 Sociology
. 12 2 8
six Department and Unit Heads. Branch N=3 as follows: Branch Manager and two Assistant Managers.
number of managers having this opinion are : communication skill (1),
human relations (1), motivation skills (1), organization behavior (2),
operations management (3), finance (4), marketing (5), accounting (6),
computer science (7), psychology (7), and sociology (8).
With re fe rence to the r e sea rch question--"how may the needed
competencies best be developed?"--Table XXXIV offers a suggestion
by indicating that emphasis should be pLaced mostly on the "purely"
business management courses: management/administrat ion, business
136
policy formulation and problem-solving as opposed to subjects relat ing
to the management of the human side of the enterpr ise such as com-
munication, human relat ions, motivation, etc. However, these subjects
relat ing to organization behavior is shown on the table as the second
group requiring emphasis. The subjects relat ing to the functional
a reas of business organizations: operations management, finance,
marketing, accounting, and computer science a re shown as the third
group requiring emphasis.
137
Summary
Bank D is one of the largest banks in the country. It has a
divisionalized organization s t ructure . The bank has written s ta te-
ments of purposes, goals, and policies. This indicates that the bank
has a strong control organization f rom where it can direct the a f fa i r s
of its highly geographically-decentralized s t ructure toward a total o r -
ganizational mission. This bank has a policy to grant operational
authority to the branches and departments. The majori ty of the mana-
gers interviewed at this bank indicated that top management supports
decentralization, that their subordinates participate in determining
work and performance standards, and that decisions a re made where
the operation takes place.
Many decisions including goal formulation, policies, budgets,
product design, and investments a re made by the top echelon of the
organization. Decisions concerning control, performance evaluation,
action plans, and loan approval a re more widely delegated. This bank
is decentralized. It is important that there is a feeling of participation
among middle and lower level managers .
138
Aggregate Treatment of the Four Banks
This section wili be devoted to a combinatorial t reatment of only
the salient aspects of the data f rom the four preceding case studies.
The six main r e sea rch questions wili continue to serve as the basic
outline for the presentation of the data. The data pertinent to the r e -
search questions numbers one and two will be presented in a compara-
tive manner to indicate the necessary contingencies that force each
bank to do things differently. The data to r e sea rch questions numbers
three to six, on the other hand, will be presented to indicate the
(multiplier effect) large magnitude of the problems.
The f i r s t r e sea rch question is "what is the status of managerial
decentralization in the selected banks?" Table XXXV and XXXVI
present the data pertinent to this question. Table XXXV, pages 139
and 140, presents the data concerning managers1 knowledge of infor-
mation and decentralization and will be discussed f i r s t .
As can be seen by examination of Table XXXV, a total of 50
percent of the managers interviewed at Bank A indicated that they were
aware of the written statements of purpose. The percentage of mana-
gers that were aware of the written statements of purpose at the other
banks is 100 percent at Bank B, 60 percent at Bank C and 40 percent
at Bank D. Concerning the written statements of shor t - range goals,
the percentage of interviewed managers at each bank that indicated
awareness of them is 60 percent at Bank A, 60 percent at Bank B, 60
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141
percent at Bank C, and 70 percent at Bank D.
With regard to the question: "Does the bank have a policy to
grant operational autonomy to the branches and departments?", all the
interviewees at Banks A, B, and C indicated that there is no such policy.
Only at Bank A did the interviewees indicate the presence of such a
policy. Considering the item of top management support for decen-
tralization and treating only the branch of each bank, the three (3)
branch interviewees at Bank A indicated that top management does not
support decentralization. The responses at the other banks for the
same item were 3 "no" at Bank B, 3 "no" at Bank C, and 3 "yes" at
Bank D.
Considering the question: "Do your subordinates participate in
determining work and performance standards?", and looking specifi-
cally at the total for each bank, the responses are 40 percent "yes"
and 60 percent "no" at Bank A, 30 percent "yes" and 70 percent "no"
at Bank B, 30 percent "yes" and 70 percent "no" at Bank C, and 60
percent "yes" and 40 percent "no" at Bank D.
Concerning the question: "Are decisions made where the oper-
ation takes place?", and treating only the total responses at each
bank, there is 30 percent "yes" and 70 percent "no" at Bank A, 20
percent "yes" and 80 percent "no" at Bank B, 30 percent "yes" and
70 percent "no" at Bank C, and 60 percent "yes" and 40 percent "no"
at Bank D.
142
Now re fe r r ing to the f i r s t r e sea rch question--"what is the
status of managerial decentralization in the selected banks? " - -and
treat ing the data in a more comparative form, the interviewees at
Bank B have a better knowledge of the presence of information with r e -
spect to the written statements of purpose. As regards to this item,
100 percent of the interviewed managers at Bank B had knowledge of it.
Others are : 50 percent at Bank A, 60 percent at Bank C, and 40 pe r -
cent at Bank D. Interviewed managers at Bank B also have better
knowledge with respect to written statements of long-range goals. The
percentage of managers who have knowledge of it in each bank is: 80
percent at Bank B, 40 percent at Bank A, 50 percent at Bank C, and
60 percent at Bank D. It should be remembered that Bank B is a
government owned bank and its purposes, goals, and policies are ,
naturally publicized.
As the table shows, the interviewed managers are more aware
of the presence of the written statements of policies than of the pre-
sence of any of the other s tatements. With regard to this, 80 percent
at Bank A had knowledge of it. Others a re 90 percent at Bank B, 100
percent at Bank C, and 100 percent at Bank D.
In other a reas , it can be seen that only Bank D, one of the
largest private banks in the country, has a policy to grant operational
autonomy to its branches and departments. More (60 percent) of Bank
D managers indicated that their top management supports decentral i -
143
zation than did managers of any other bank. The f igures for this item
are : 20 percent at Bank A, 30 percent at Bank B, and 30 percent at
Bank C. Bank D also makes a better showing with regard to subordi-
nate participation in decisions pertaining to work and performance
standards. In this regard , it is 60 percent at Bank D, 40 percent at
Bank A, 30 percent at Bank B, and 30 percent at Bank C. With regard
to decisions being made where the operation takes place and considering
the branch levels only, Bank D has the highest delegation. The f igures
a re : 67 percent at Bank D, 0 percent at Bank A, 0 percent at Bank B,
and 0 percent at Bank C. Note that Bank D has a policy to decentralize
its branches and departments.
Table XXXVI, pages 144 and 145, presents a linear responsibi-
lity chart to show who makes what decisions and how far down in the
organizational h ierarchies some decision authorities a re delegated.
As can be seen by examination of Table XXXVI, all the major
decisions (long-range goals, policies, shor t - range goals, budgets, pro-
duct design, and so forth) a re made at the higher levels in the four
banks. Opportunity for input is not given to the lower levels in the h i e r -
archies . Long-range goals a r e made by the board of di rectors with
inputs f rom the president and the vice presidents of Banks A, C, and
D which a re private. At Bank B, that decision is made solely by the
board of d i rec tors . Note that Bank B is the government-owned bank
whose goal is economic development. Decisions about shor t - range
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goals a re still highly centralized at all the banks. This decision, how-
ever, involves management committees at Banks A and D.
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management and lower management levels a r e control, performance
evaluation, action plans, and loans. In the area of loans for instance,
the authority to approve loans is fa ir ly well delegated in the private
banks A, C, and D. In Bank A, the authority is delegated down to the
a rea head office which controls severa l small branches. At banks C
and D, the branch managers can approve limited amounts of loans. At
Bank B, the government bank, only the board can approve loans. The
reason is simple. The bank is committed to the underwriting of only
large scale investments, this implies a high degree of scrutiny.
The second r e sea rch question was "what a re the variables that
influence decentralization in the selected banks?" Table XXXVII, page
147, presents the data pertinent to this r e sea rch question in t e r m s of
information f rom the four top executives f rom the four banking estab-
l ishments. This information concerns the contingency variables
forcing the banks to centralize or to decentralize.
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organizations towards decentralizing. Among the three private banks
A, C, and D, competition is seen to cause decentralization. Two
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148
factors that all the four top executives agree to be causing decentral i -
zation are: (a) geographic decentralization of physical s t ructure and
(b) growth. For Bank B, the government owned bank, the environment
of the bank is interpreted differently. Competition, r u r a l banking
scheme, the enterpr ises promotion decree,and the nature of the market
a re seen by the top executive to have no effect on the decision to cen-
tral ize or to decentralize. According to the top executive of Bank B,
there is presently very little competition in the area of financing very
large scale investments. He said that when the competition increases ,
his bank would have no cause to stay in business.
One salient finding that can be made is that there is a s imilar i ty
in the way the top executives of the private banks, A, C and D, view the
environment. Their views were s imilar with respect to competition,
geographic dispersion, growth, r u r a l banking scheme, government
participation and the nature of the market thus accounting for 75 percent
of the fac tors .
In the views of the executives of the private banks, the environ-
ment of banking calls for decentralization in the organization s t ructure .
Seventeen of the thirty-two responses (53 percent) f rom all four chief
executives support decentralization. When the views of only the private
bank heads a re counted, this would be fif teen out of twenty-four (or 63
percent) in support of decentralizing.
149
The th i rd r e s e a r c h question was "what a r e the att i tudes of the
bank manage r s towards decentra l izat ion of dec i s ion-mak ing?" Table
XXXVIII, page 150, p resen ts the data re levant to that question. The
data shows the at t i tudes of ail the manage r s interviewed toward subor -
dinate part icipat ion in decis ion-making. The s ta tements marked "X"
on the table a r e assumed to be negative toward human atti tude to work.
The s ta tements marked "y" a r e assumed to be positive.
As can be seen by examination of Table XXXVIII, 63 percent of
all the for ty (40) manage r s interviewed identified with the "X" s t a t e -
ment in the f i r s t pair of s t a t emen t s - - "peop le don't rea l ly like to work".
Only 37 percent of the in terviewees felt that people want to contribute
toward goals they have helped to es tabl ish . In the second pair of s t a t e -
ments , 55 percent of the in terviewees indicated that only few of the i r
subordinates can handle work requ i r ing creat ivi ty , se l f -d i rec t ion ,and
se l f -con t ro l . 45 percent indicated that most of thei r subordinates can
exe rc i se f a r m o r e respons ib i l i ty , se l f -d i rec t ion ,and se l f - con t ro l than
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percent felt that the manager must encourage ful l part icipat ion on i m -
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thus aid in management development. In the fifth pair , 77 percent of
the interviewees feit that people will love to work if the pay is decent
and the boss is f a i r , then productivity and efficiency will increase .
23 percent feel that expanding subordinate autonomy and participation
will lead to improvements in operating efficiency and productivity. The
sixth and final pair has 60 percent of the interviewees indicating that
they do not have confidence that their subordinates will ca r ry out
delegated responsibil i t ies effectively. 40 percent indicated that they
have confidence that subordinates will car ry out delegated responsibi-
lities effectively.
The fourth resea rch question is "what training, if any, have
bank managers had in the skills needed for decentral izat ion?" Table
XXXIX, page 152, presents the data pertinent to this question. The
table presents the a reas in which all the forty interviewed managers
have been trained.
According to Table XXXIX, twenty-seven (27) of the forty (40)
managers (68 percent) interviewed have received some type of in-
house training. 65 percent have been trained in some bank technical
skills, 48 percent have had conceptual management theories , 45
percent have been coached, 33 percent has had job rotation, 28 percent
has had decision-making training, 10 percent have been involved with
continuing education, 5 percent have had leadership training, 5 percent
TABLE XXXIX
AREAS IN WHICH MANAGERS HAVE HAD TRAINING (N=40)
152
Managers Have Received Training in: Number Trained %
In-house training 27 68 Bank technical training 26 65 Conceptual management theory 19 48 Coaching 18 45 Job rotation 13 33 Decision-making 11 28 Continuing education 4 10 Leadership 2 5 Communication 2 5 T-group/sensi t ivi ty training 1 3 Motivation 1 3
have had training in communication, 3 percent has had T-group/sens i -
tivity training, and 3 percent has had motivation skill training.
The fifth r e sea rch question is "what general management com-
petencies do the bank managers consider necessary for managerial
decentral izat ion?" Table XXXX, page 153, presents information for
this question. The competencies it presents a re ranked according to
which ones managers consider most necessary for managerial decen-
tral izat ion.
As can be seen f rom Table XXXX, 98 percent (39 out of 40) of
the managers interviewed in the four banks and four branches a re of
the opinion that analytical problem-solving skill is very important for
managerial decentralization. 95 percent think that leadership ability
TABLE XXXX
COMPETENCIES FOR MANAGERIAL DECENTRALIZATION: OPINIONS OF ALL MANAGERS INTERVIEWED (N=40)
153
Weighted Very Ave. Not Ranking Score Imp. % Imp. % Imp. %
Analytical problem-soivinj g 79 39 98 1 2 0 0 Leadership 78 38 95 2 5 0 0 Communication 77 37 93 3 7 0 0 Motivation 77 37 93 3 7 0 0 Administration 72 32 80 8 20 0 0 Training skill 71 31 78 9 22 0 0 Decisiveness 69 29 73 11 27 0 0 Technical skill 66 28 70 10 25 2 5 Conflict resolution 60 21 53 18 45 1 2 Aggressiveness 43 15 38 13 33 12 29
is very important, 93 percent gave the "very important" status to
communication and motivation. Other competencies considered very
important and the percentage of the managers having such opinions are:
administration 80 percent, training skill 78 percent, decisiveness 73
percent, technical skill 70 percent, conflict resolution 53 percent, and
aggressiveness 38 percent.
Some of the competencies considered very important by some
managers a re considered only of average importance by some. Those
competencies considered to be of average importance and the percen-
tage of the managers considering them so a re : problem-solving 2
percent, leadership 5 percent, communication 7 percent, motivation
7 percent, administration 20 percent, training skill 22 percent,
154
decisiveness 27 percent, technical skill 25 percent, conflict resolution
45 percent, and aggressiveness 33 percent.
Competencies considered unimportant and the percentage of the
managers considering them to be so are : technical skill 5 percent,
conflict resolution 2 percent, and aggressiveness 29 percent.
The sixth r e sea rch question is "how may the needed compe-
tencies best be developed?" Tables XXXXI and XXXXII present the
data pertinent to this question. Table XXXXI, page 155, presents the
data concerning the programs for developing the needed competencies
and will be discussed f i r s t .
As can be seen in Table XXXXI, 95 percent (38 out of 40) of the
interviewed managers think that problem-solving workshop should be
given much emphasis as a program for developing the necessary com-
petence for managerial decentralization. Other programs requiring
much emphasis and the percentage of managers of such opinion are :
meetings and conferences 93 percent, courses in management theory
93 percent, in-house training 88 percent, motivation 80 percent, uni-
vers i ty executive development program 65 percent, coaching 58 percent,
T-group/sensi t ivi ty training 42 percent, job rotation 33 percent, and
continuing education 25 percent.
Some managers felt that some of these programs requi re only
little emphasis in developing the needed competencies for managerial
decentralization. These programs and the percentage of managers
155
TABLE XXXXI
PROGRAMS FOR DEVELOPING COMPETENCIES FOR DECENTRALIZATION (N=40)
Weighted Emphasis Score Much % Little % None %
Problem-solving workshop 78 38 95 2 5 Meetings and conferences 77 37 93 3 7 Courses in management 77 37 93 3 7
theory In-house training 75 35 88 5 12 Motivation 72 32 80 8 20 University executive develop- 65 26 65 13 33 1 2
ment Coaching 62 23 58 16 40 1 2 T-group/sensi t ivi ty program 57 17 42 23 58 Job rotation 49 13 33 23 58 4 : .0 Continuing education 44 10 25 24 60 6 15
considering them to be needing only little emphasis a re : problem-
solving workshop 5 percent, meetings and conferences 7 percent,
courses in management theory 7 percent, in-house training 12 percent,
motivation 20 percent, university executive development program 33
percent, coaching 40 percent, T-group/sensi t ivi ty program 58 per-
cent, job rotation 58 percent, and continuing education 60 percent.
P rograms upon which emphasis should not be placed for
developing the competencies and the percentage of managers who think
so are : university executive development program 2 percent, coaching
2 percent, job rotation 10 percent, and continuing education 15 percent.
156
Table XXXXII presents the data concerning the opinions of all
the forty interviewed bank managers concerning the subjects they
think should be emphasized in the university curriculum for manage-
ment development.
TABLE XXXXII
SUBJECTS TO EMPHASIZE IN UNIVERSITY CURRICULUM FOR MANAGEMENT DEVELOPMENT: OPINION OF ALL
MANAGERS INTERVIEWED (N=40)
Weighted Emphasis Score Much % Little % None %
Analytical problem-solving 78 38 95 2 5 Management/Administration 77 37 93 3 7 Business policy formulation 76 36 90 4 10 Motivation skill 76 36 90 4 10 Communication skill 73 33 83 7 17 Human relations 72 32 80 8 20 Organization behavior 71 31 78 9 22 Finance 62 22 55 18 45 Operations management 61 21 53 19 47 Marketing 57 17 42 23 58 Accounting 56 16 40 24 60 Computer science 50 10 25 30 75 Psychology 47 10 25 27 68 3 7 Sociology 43 5 12 33 83 2 5
As can be seen by examination of Table XXXXII, 95 percent
(or 38 out of 40) of the interviewed managers thought that analytical
problem-solving should be much emphasized in the university curr icu-
lum for management education. Other subjects that should receive
much emphasis and the percentage of the managers of that opinion are:
157
management/administrat ion 93 percent, business policy formulation
90 percent, motivation skill 90 percent, communication skill 83 per-
cent, human relat ions 80 percent, organization behavior 78 percent,
finance 55 percent, operations management 53 percent, marketing
42 percent, accounting 40 percent, computer science 25 percent, psy-
chology 25 percent, and sociology 12 percent.
Subjects that were included in the little emphasis category and
the percentage of interviewees so designating them are : problem-
solving 5 percent, management/administrat ion 7 percent, business
policy formulation 10 percent, motivation 10 percent, communication
17 percent, human relations 20 percent, organization behavior 22 per-
cent, finance 45 percent, operations management 47 percent, marketing
58 percent, accounting 60 percent, computer science 75 percent,
psychology 68 percent, and sociology 83 percent. Those subjects
categorized as belonging to the no emphasis group and the percentage
of the managers designating them as such are: psychology 7 percent,
and sociology 5 percent.
With re fe rence to the sixth r e sea rch question "how may the
needed competencies best be developed?", Table XXXXII offers a
suggestion by showing three groups of subject a reas which can be
emphasized. In order of importance, the f i r s t group is the "purely"
general business management subjects: problem-solving, manage-
ment/administrat ion, and business policy formulation. The second
158
group re la tes to the management of the human side of the enterpr ise
and include: motivation, communication, human relations,and organi-
zation behavior. The third group includes the functional a reas of
business administration: finance, operations management, marketing,
accounting, and computer science.
159
Aggregate Summary
The data have shown that all the four banks studied have a t en -
dency toward centra l ized management . All of them have well f o r m u -
lated wri t ten s ta tements of goals, purpose, and policies . It must be
pointed out, however , that some of the manage r s a r e not aware of the
exis tence of this information. Only one of the banks has a f o r m a l policy
to grant opera t ional autonomy to the branches and depar tments . The
genera l impres s ion among the manage r s interviewed is that top man-
agements do not support decentra l izat ion, that the i r subordinates do
not par t ic ipate in de termining work and pe r fo rmance s tandards , and
that decisions a r e not made where the opera t ion takes place.
These banks have general ly excluded the regional m a n a g e r s ,
depar tment heads , branch manage r s , and supe rv i so r s in the making
of the organizat ions s t r a teg ic decis ions . Decisions which a r e made
exclusively by the top h i e r a r chy include long-range goals, pol icies ,
s h o r t - r a n g e goals, budgets, product design, and inves tments . De-
cisions which a r e proper ly delegated to the middle and lower manage-
ment levels include control , pe r fo rmance evaluations, action plans,
and loans.
T h e r e is a low degree of delegation, part icipat ion, and decen-
t ra l i za t ion in t h r e e of the four banks studied. When regional , a r e a ,
and branch manage r s neither par t ic ipate in dec is ion-making nor have
the autonomy to run the i r divisions or b ranches , it will be difficult to
160
hold them responsible for the success or fai lure of their operations
(5, p. 138). The management approach used in these banks is that of
strong control and co-ordination f rom the center (headquarters) for the
accomplishment of company-wide objectives ra ther than the granting
of autonomy and the profit center status to the parts (branches or
regions) so that they can assume strong competitive positions in their
various markets and thereby achieve maximum re turns on company-
wide investments.
CHAPTER BIBLIOGRAPHY
1. Carl is le , Howard M. , Management: Concepts and Situations, Chicago: Science Research Associates, Inc. , 1976.
2. CuLbertson, K. and Thompson, M . , "An Analysis of Supervisory Training Needs, " Training and Development, (February, 1980), 58-62.
3. McGregor, D. M. , The Human Side of Enterpr i se , New York: McGraw-Hill, 1960.
4. Miles, Raymond E . , Theories of Management: Implications for Organizational Behavior and Development, New York: ^McGraw-Hill, 1975.
5. Jackson, John H. and Morgan, Cyril P . , Organization Theory: A Macro Perspective for Management, Englewood, New J e r -sey: Prentice Hall, 1978.
6. Smith, G. A. J r . , Managing Geographically Decentralized Com-panies, Boston: Harvard University Division of Research, 1958.
161
CHAPTER IV
SUMMARY, CONCLUSIONS, RECOMMENDATION, AND
A MANAGERIAL DECENTRALIZATION MODEL
Summary of the Study
The purposes of this study were to ascer ta in the status of man-
agerial decentralization in selected Nigerian banks, to identify the
training needs for managerial decentralization in those banks, and if
necessary , to develop a model for managerial decentralization for the
banks studied.
A thorough review of the l i terature was made to discover the
state of the a r t s of decentralization and management development and
also to delineate the necessary elements in these a r t s . After this s u r -
vey, an interview guide was prepared for use in the interview process .
The interview guide was designed to allow some discretion on the part
of the interviewer. It was specifically designed to get information per-
taining to the following r e sea rch questions:
1. What is the status of managerial decentralization in the selected
banks?
2. What a re the key variables that influence decentralization in the
selected banks?
3. What a re the attitudes of the bank managers toward decentralization
162
163
of decision-making?
4. What training, if any, have bank managers had in the skills needed
for decentralization?
5. What general management competencies do the bank managers con-
sider necessary for managerial decentralization?
6. How may the needed competencies best be developed?
The interview guide was validated by a panel of three experienced
professors of management in the College of Business Administration
at North Texas State University. A pilot study was undertaken in three
selected banks in Denton, Texas, to test the effectiveness of the in ter -
view guide in seeking answers to the r e sea rch questions and to update
the interview guide.
The study was an in-depth case study of four carefully selected
banking establishments in Nigeria. The group is comprised of one
government owned development bank, one commercial bank with the
full allowable foreign control, and two indigenously owned commercial
banks. Selection was done by listing the banks in each group on a
separate slip of paper and drawing the slips f rom a container.
Interviews were held at the headquarter level of each bank and
also at a branch of each of the banks to find out the amount of decen-
tral izat ion allowed the branches. The total number of main offices
and branches studied is eight. In each banking establishment, in ter-
views were held with the president and six other managers at the
164
headquarter level. At the branch level the general manager and two
other managers were interviewed. Sometimes, there were repeat in-
terviews when the interviewer felt the need to explore a point fu r ther .
The study was effective in getting answers to the r e sea rch questions.
Conclusions
The following conclusions are made f rom the analysis of the
data.
1. Some of the interviewed managers were not aware of the information
about organizational purposes, long-range goals, policies, and shor t -
range goals (Table XXV, pp. 139 and 140).
2. There is a low level of delegation and subordinate participation in
decision-making (Tables XXXV and XXXVI, pp. 139 and 140 and 144
and 145).
3. A large major i ty of the interviewed managers indicated that de-
cisions are not made where the operation takes place (Table XXXV,
pp. 139 and 140).
4. Managerial decentralization is presently difficult because of the
lack of trained managers .
5. Organization environment necessi tates decentralized s t ructures
(Table XXXVII, p. 147).
6. Managerial decentralization is not viewed favorably by a major i ty
of the managers interviewed.
165
7. The management of the human side of the enterpr ise is judged to be
very important (Table XXXX, p. 153), but the existing in-house t r a in -
ing programs only sparsely t reat this a rea (Table XXXIX, p. 152).
8. Analytical problem-solving ability is regarded as being very impor-
tant for managerial decentralization by an overwhelming majori ty of
the managers interviewed (Table XXXX, p. 153).
9. University curriculum for management development should empha-
size the following subjects . In order of importance these are : admini-
strat ive management subjects like problem-solving, management/
administration, and business policy formulation; a reas relat ing to human
management and interpersonal behavior like motivation, communication,
and organization behavior; and the functional a reas of business admini-
strat ion such as finance, operations management, marketing, and
acco unting.
The above conclusions will be utilized along with basic princi-
ples and concepts found in the related l i terature to develop a r ecom-
mendation (model) for managerial decentralization for banks such as
those that have been studied.
Recommendation
Managerial decentralization of the private commercial banks
studied is imperative for efficient and effective functioning of the sys -
tems and is therefore recommended. Among the factors that make
166
managerial decentralization necessary for these banks a re : (1) the
geographic decentralization of s t ruc tures , (2) the accelerated economic
growth, (3) competition, (4) the educated nature of bank employees,
and (5) the agreement of top management executives that managerial
decentralization is needed.
A managerial decentralization model will be presented below for
use in the decentralization effort . This model was developed af ter
(1) a detailed survey of the l i terature on managerial decentralization
and management development, and (2) an analysis of the data f rom the
interviews of bank managers . Based on the above two, a managerial
decentralization program that emphasizes management development is
encouraged. The model contains a brief description of the necessary
managerial competencies that should be included in the management
development program. However, the model does not include detailed
descriptions of the techniques for the development of the competencies.
This model is recommended for the banks included in this study
and for other banks that find themselves in s imilar situations. The
model will be presented in three phases. Phase I will be an organi-
zation analysis phase. Phase II will be devoted to management develop-
ment and Phase III will present an idealized power allocation format .
167
A Managerial Decentralization Model
Phase I--Organization Analysis
The goal of the managerial decentralization effort should be o r -
ganization effectiveness. There are many measures of effectiveness
but since these banks a re in dire need of efficient human resource
groups and viable organizational patterns, a systems approach to o r -
gan iza t iona l improvement should be followed. The systems approach
implies that the way to improve the total system is to improve its
parts . The initial measures of effectiveness should be the following:
1. Management development
2. Worker performance and attitude
3. Delegation and participation
4. Open communication
5. Efficiency
6. Customer relations
7. Improved service
8. Market standing
Additional measures to be added as managerial decentralization
matures are : adaptability, flexibility, productivity, growth, job sa t i s -
faction, and goal congruence. These measures of effectiveness will be
real ized through a systems approach to decentralization.
168
Organization Character is t ics Structure Control Systems Managerial Pract ice Evaluation Reward/penalty s t ructure
Employee Character is t ics Attitudes, Beliefs, Education, Values, Abilities, Personality
Environmental Character is t ics Economic conditions Market conditions T echnology
Emergent Behavior Loyalty, Dedication, Attendance, Promptness , Intergroup/lntragroup
--Interact ion —Activities
I Behavioral Consequences Efficiency Effectiveness Satisfaction Self-actualization Good public image
/Compara tor \ O ut'come 1
vs. vGoals
Fig. 1--A general systems approach to managerial decen-tral ization.
The general sys tems approach to decentralization implies that
the manager must put the various sub-sys tems in order for the total
system to work effectively. These elements or sub-sys tems include:
A. The Organizational Character is t ics . This is comprised of s t ruc -
ture , control sys tems, policies, and so for th.
B. Employee Character is t ics . This is comprised of employee at t i-
tudes, beliefs, education, abilities, values, personality t ra i t s , and so
forth. c
C. Environmental Character is t ics . This includes economic, market
and technological conditions.
169
The interaction of the elements within the sub-systems, and among the
sub-systems will give r i se to emergent behavior--organization culture,
loyalty, dedication, attendance, promptness, or lack of them. These
emergent behaviors will lead to behavioral consequences which include
efficiency or lack of it, effectiveness or lack of it, satisfaction or lack
of it, and so forth. Within the comparator, these consequences are
compared to the stated goals and objectives of the organization. If
outcomes (behavioral consequences) are not congruent to the stated
goals, the sub-systems would have to be up-graded to give the results
desired. If resources are not available to bring about this up-grading
within the sub-systems, goal sub-optimization would be another course
of action.
Two sub-systems in the banks studied will need to be improved.
In the organizational characteristics sub-system, structural change
from the present centralized design to a more organic arrangement is
necessary. Many of the functions will need to be decentralized. But
before this is done, an up-grading of the second sub-system is impera-
tive. According to the finding, a major stumbling block to effective
decentralization will be the lack of capable managers. Concerted man-
agement education should be the starting point of the decentralization
effort.
170
Phase II--Management Development
Areas of training. - -While training in the bank technical skills
is very important, the pr imary focus of management development for
managerial decentralization should be on behavioral education to bring
about changes in behavior and attitude, and also in management meth-
ods and s t ra tegies . The specific areas of training and education must
include:
1. Conceptual management theories .
The objective is to develop managers who can think in behavioral
science t e r m s . Training in the conceptual management theories is an
activity which has as its goal individual achievement of greater job
effectiveness, improved interpersonal relationship in organizations,
knowledge of management techniques, and better adjustment of an ex-
ecutive to the total environment particularly in an industry employing
"knowledge workers" .
2. T-group/sensi t ivi ty training.
The purpose of sensitivity training is the development of the executive's
awareness of himself , of others , of group processes , and of group cul-
ture . The T-group ' s purpose is to help people (1) to explore their
values and their impact on others ; (2) to determine if they wish to
modify the old values and develop new ones; and (3) to develop aware-
ness of how groups can inhibit as well as facili tate human growth and
171
decis ion-making. The end-goal of the T-g roup / sens i t i v i ty t ra in ing is
to enhance authenticity in human re la t ions .
3. Meetings and conferences .
This method of t ra in ing and education involves d iscuss ing topics that
have re levance to the work sett ing. It can be a way to bring about an
open communication of problem-solving and decis ion-making but above
all , it may give the young manager an overa l l view of the organizat ion
and bring about his commitment to organizat ional ob jec t ives .
4. Delegat ion/par t ic ipat ion.
While th is is a goal of the t ra in ing ef for t , it is also a t ra in ing s t ra tegy
in i tself . The most important aspect of delegation t ra in ing is the
actual delegation i tse l f . A f ledgling f l i e r does not m a s t e r flying by
m e r e observat ion of the pilot. He must prac t ice the flying h imse l f .
Delegation t ra in ing is consummated by actual delegation.
5. Dec is ion-making /prob lem-so lv ing .
All managers and employees in the bank organizat ion should be involved
in some decis ion-making. During this t ra in ing period, management
t r a inees should be taught this problem-solv ing technique (or any o ther
vers ion) : (1) problem definition; (2) gather information; (3) in te rpre t
information; (4) develop solutions; (5) select the best p rac t ica l solution;
(6) implement solution; and (7) evaluate the ef fec t iveness of the solution.
6. Communication.
A c l imate of open communication is a necess i ty . This should be en-
172
couraged and the manage r s should be urged to communicate thei r views.
Horizontal communication is nece s sa ry for coordination of var ious
funct ions.
7. Tra in ing sk i l l s .
A young manager should be a good t r a ine r of his subordinates . The
m a n a g e r ' s ro l e is not so much one of controll ing organizat ion m e m b e r s
as it is of faci l i ta t ing thei r pe r fo rmance , growth, and development. The
manager should t h e r e f o r e be t ra ined to t r a in his people through coach-
ing, part icipat ion, motivation, work skil l t ra ining, and so fo r th .
8. Manager ia l functional p r o c e s s e s .
Every manager should be taught the bas ics of each of the manager i a l
functional p roces se s : planning, organizing, s taff ing, direct ing, con-
t rol l ing, repor t ing , budgeting, and evaluating.
9. Management Methods (techniques).
It is important that young managers and asp i r ing manage r s be taught
the bas ics of the essen t ia l management techniques like management by
object ive (M. B.O.) , management by exception (M. B. E . ) , pe r fo rmance
appra i sa l , and so fo r th .
Task t e a m s , commit tees , and Boards : a s t ra tegy for manage-
ment development. - -A good s t ra tegy for management development,
to ta l sys t em or ienta t ion of manage r s , part icipat ion in the decision
p r o c e s s , motivation, and the development of commitment among mana -
g e r s i s the crea t ion of what can be var ious ly called task t e a m s ,
173
management committees, junior boards, product boards, and so forth.
The members of these teams can be drawn f rom various departments
for a total organization-wide objective or f rom within a department for
the departmental objective. Issues to tackle can include: customer
service , performance standards, action plans, and so forth.
Every manager in each bank should be involved in some aspect
of the training program. Trained managers will slip back to old habits
and behaviors if fellow managers and subordinates do not respond to
their newly acquired knowledge. The chief executive and other members
of the top echelon should participate in all a reas of the development
program. An accelerated program can be designed for top management.
Their support must be shown for the program to be effective.
Phase III--Decentralizing
The decentralization effort in the organizational character is t ics
sub-sys tem should be initiated once substantial progress has been made
in the management development program. It must be pointed out that
training is a continuous thing in as much as growth and learning a re
continuous. The managers must continue to delegate and motivate their
subordinates and employees. It should be a way of life in the organi-
zation.
The decentralization program is simply a way of getting organi-
zational members involved in the operation of the enterpr ise for
174
maximum efficiency of the organization and also for employee job-
satisfaction and self-actualization. Figure 2 presents an idealized
management participation plan and it will be discussed below.
As can be seen by examination of figure 2, effort is made to see
that many managerial levels are involved in each decision process.
Long range-goals are approved by the board. The plan is developed by
a planning department, if any, or a management committee, if the or -
ganization prefers. Other managers, as the table shows, provide
substantial input in the long range-goals decision. Policies are also
made in the same fashion but supervisors and employees may provide
inputs. Since policies are operating tools and affect everybody in the
bank, seeing that everyone provides input will lead to a general ac-
ceptance of the policies. Both policies and controls should be
organization-wide to promote uniformity except where differences in
the local areas are necessary for competition and other contingencies.
There should be some leeway in the form of services offered. "When it
is necessary to make some changes in the form of the service for local
taste, this should be done. Therefore, the branch should have auto-
nomy in this area.
Performance evaluation and action plans are other area in
which local autonomy is necessary. The branch managers should be
allowed to realize success through their own decisions. The branch
manager should have the authority to initiate and approve performance
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176
evaluation when he feels the need. The department heads should be
able to do this too. In each instance, those being evaluated should
know and agree on the performance and evaluation measures . The
branch manager, a rea manager or department head should be able to
initiate and approve action plans for the branch, area or departmental
objectives respectively. The authority to approve loans should be
handed down to loan department in each level of the organization.
There should be a limit on the amount of loan each managerial level
should be allowed to approve. The details a re a matter of organi-
zational situations.
The where best question in power allocation (5)--( l ) There a re
no declarative statements on this mat te r . Economic and competitive
facts should be given great weight when bank management is de ter -
mining whether a function should be handled centrally or locally (5).
(2) Key decisions, especially, should be made by whatever level, cen-
t r a l or local, is most apt to make them. These a re the decisions r e -
lating to whatever functions or a reas must be handled exceptionally
well if a company is to succeed in its environment. (3) Top manage-
ment should think in t e rms of the power and authority to relinquish
ra ther than of how much it can retain. If it is not absolutely necessary
to maintain the authority, delegate it.
CHAPTER BIBLIOGRAPHY
1. Ber l iner , W. W., and McLarney, Management Pract ice and Training: Cases and Principles, Homewood, Illinois: Richard D. Irwin, Inc . , 1974.
2. Euske, K. J . , Jackson, D. W. J r . , and Rief, E. W., " P e r f o r -mance and Satisfaction of Bank Managers, " Journal of Bank Research, (Spring, 1980), 36-42.
3. Kefalas, A. G., Schoderbek, C. G., and Schoderbek, A. G. , Management Systems Conceptual Considerations, Dallas: Business Publications, Inc. , 1980.
4. Mitchell, T . R . , and Scott, W. G., Organization Theory: A Structural and Behavioral Analysis, Homewood, Illinois: Richard D. Irwin, Inc. , 1976.
5. Smith, G. A. J r . , Managing Geographically Decentralized Com-panies, Boston: Harvard University Division of Research, 1958.
177
APPENDIX A
178
179
INTERVIEW GUIDE
FOR MANAGERIAL DECENTRALIZATION
AND TRAINING NEEDS ASSESSMENT
Part I: General Information
Name of bank
Number of branches
Date of interview
Bank ownership
Total asset s ize
Type of Bank (business)
Number of employees
180
Part II: Decentralization
#1, All Management, Decentralization
1. Does your bank have a written statement of the following?
Purpose or mission Yes No
Long-range goals Yes No
Policies Yes No
Short-range goals (objectives) Yes No
2. Does the bank have a distinct policy to decentralize the decision-
making function to the branches and departments?
Yes No
3. Does top management support decentralization?
Y es No
4. Do your subordinates participate in determining work and
performance standards? Yes No
5. Do you allow decisions to be made at the place where the operation
takes place? Yes No
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182
#2, Top Management, Decentralization
1. Do the following variables lead you to centralize or to decentralize
or has it no effect on your organization?
Variables Centralize Decentralize No-effect
Competition
Skilled managers
Geographical dispersion
Growth (size)
Government regulations:
1. Rural banking scheme 2. Enterpr i ses promotion
decree
Government participation
Nature of the market
Training of top management
Others
2, Does your bank plan to turn the r u r a l branches into:
(a) Profit centers? Yes No
(b) Full service bank but not
profit centers? Yes No
(c) An agency (deposit and cash)? Yes No
(d) Does your bank only plan to comply with government regulations? Yes No
183
#3, All Management, Attitude Survey
1-6 Which of the following in the pair of statements of people and work do you agree with?
1. (X) PeopLe don't really like to work. OR
(Y) People want to contribute towards meaningful goals which they have helped to establish.
2. (X) Only few of my subordinates can handle work which requires creativity, self-direction and self-control.
OR (Y) My subordinates can exercise far more responsibility, self-
direction and self-control than their present job demands.
3. (X) The manager 's basic task is to closely supervise and control his subordinates.
OR (Y) The manager 's basic task is to create an environment in
which all members may contribute to the limits of their ability.
4. (X) The manager must establish detailed work routines and pro-cedures and enforce them firmly but fairly.
OR (Y) He must encourage full participation on important matters ,
continually broadening subordinate self-direction and control and aiding in management development.
5. (X) People will love to work if the pay is decent and the boss is fa i r , then productivity and efficiency will increase.
OR (Y) Expanding subordinate autonomy and participation will lead to
improvements in operating efficiency and productivity.
6. (X) I have confidence that my subordinates will carry out dele-gated responsibilities effectively.
OR (Y) I do not have the confidence that they will.
184
#4, All Management, Training Needs
1. Which of the following types of training have you been given to prepare you for assuming greater responsibil i ty?
(a) Related work experience Yes No
(b) Coaching Yes No
(c) In-house training courses Yes No
(d) Motivation skill training Yes No
(e) T-group or sensitivity Yes No training
(f) Bank technical skills training Yes No
(g) Communication skill or course Yes No
(h) Decision-making/problem-solving
workshop Yes No
(i) Leadership skill workshop Yes No
(j) Conceptual management theories Yes No
(k) Continuing education programs Yes No
(1) Job rotation Yes No
(m) Others Yes No
#5, All Management, Training Needs
1. Do you consider each of the following competencies very important, of average importance, or not important for managerial decentral i-zation?
Competencies Very Imp. Ave. Imp. Not Imp.
Administrative
Decisiveness
185
Competencies Very Imp. Ave. Imp. Not Imp.
Communication
Motivational skill
Analytical problem-solving
Conflict resolution skill
Training skill
Aggressiveness
Leadership skill
Technical skill
#6, All Management, Training Needs
1. Do you think that much, little, or no emphasis is needed in the following programs for development of management competencies for decentralization?
Much Little None
a. Coaching
b. In-house training courses
c. T-group/senstivity training program
d. Motivation skill program
e. Job rotation
f. Decision-making/problem-solving workshop
g. Continuing education program
h. University executive development program
186
Much Little None
i. Meetings and conferences
j. Courses in management theories
k. Highly organized formal programs
1. Others
#6, AIL Management, Training Needs
2. Do you think that much, little or no emphasis should be given to the following a reas in university curriculum for management training?
Much Little None
a. Communication skill
b. Human relations
c. Organization behavior
d. Management, administration
e. Business policy formulation
f. Analytical problem-solving skill
g. Computer technology
h. Accounting
i. Finance
j. Marketing
k. Operations
1. Sociology
m. Psychology
n. Others (motivation)
APPENDIX B
187
North Texas State
University
December 18, 1980 0 , n 7 ° 6 2 0 3 x a s
College of
Education
To Whom It May Concern:
In order to be helpful to our many international students, some of us who are professors here, and with whom such students study and do research, are encouraging those students to do research in their native countries when-ever it is possible. We, of course, learn more about their countries while they are here and through their research.
Mr. Leonard Ottih, for whom this letter is written, is one of the excellent students from Nigeria. His special research for his dissertation concerns management in banking. The proposal for the study has been approved by a committee of faculty here, so we believe that it is, indeed, a worthwhile study. In order for Mr. Ottih to complete his study, the cooperation of banking officials is needed. I hope that you will find it possible to assist Mr. Ottih. We know that you are busy, but if you can assist him, your cooperation will be most greatly appreciated.
I wish to assure you that neither individual banks nor their personnel will at any time be identified in the writing of the dissertation or in discussion of the results of the study. Proper research of this kind requires that the anonymity of the subjects be preserved. We respect that requirement.
I have had the pleasure of meeting and of having as students in my courses many Nigerian students. Their scholarly attitudes and efforts,, as well as their friendliness and courtesy, are excellent.
I wish to express my gratitude for whatever assistance you can provide. Especially do I wish to express my hope that Nigeria's hopes will be fulfilled.
Sincerely,
Roderic C. DuChemin, Ph.D. Professor of Education North Texas State University
Office of Student Services • AC 817-788-2736
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Carl is le , H. M . , Management: Concepts and Situations, Chicago: Science Research Associates, Inc . , 1976.
Dikko, A. M. , Training Needs in Industrializing Society, Ibadan, Nigeria, 1978.
Drucker, P. F . , People and Performance: The Best of Peter Drucker on Management, New York: Harpe r ' s College P r e s s , 197?!
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189
190
Jackson, J . H. and Morgan, C. P . , Organization Theory, A Pro-spective for Management, Englewood, New Jersey : PreHTce Hall, 1978.
Kefaias, A. G. , Schderbek, C. G., and Schoderbeck, A. G., Manage-ment Systems^ Conceptual Considerations, Dallas: Business Publications, Inc. , 1980.
McConkey, D. D . , No-Nonsense Delegation, New York: American Management Association, 1974.
Miles, R. E . , Theories of Management: Implications for Organizational Behavior and Development, New York: McGraw-Hill, 1975.
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Mitchell, T. R. and Scott, G. W., Organization Theory: A Structural and Behavioral Analysis, Homewood, Illinois: Richard D. Irwin, Inc . , 1976.
Morr i s , William T . , Decentralization in Management Systems, Ohio: Ohio State University P r e s s , 19687
Nafziger, W. E . , African Capitalism: A Study in Nigerian Ent repre-neur ship, Stanford, California: Hoover Institutes P r e s s , 1977.
Onyemelukwe, C. C . , Problems of Industrial Planning and Management in Nigeria, New York: Columbia University P r e s s , 1966.
Rice, A. K . , The Enterpr ise and Its Environment: A System Theory of Management Organization, London: Tavistock~Publications, 1963".
Schatz, S. P . , Nigerian Capitalism, Berkeley: University of Cali-fornia P r e s s , 1977.
Smith, G. A. J r . , Managing Geographically Decentralized Companies, Cambridge, Massachusetts: The Riverside P r e s s , 1958.
Thompson, J . D . , Organizations in Action, New York: McGraw-Hill, 1967.
Wepersky, Basi l A . , Banking and Finance in Sierra Leone: A Develop-ing Economy, Atlanta: Georgia State College Research!" 1968.
191
Art icles
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Brown, Martha A . , "Values - - A Necessary But Neglected Ingredient of Motivation on the Job, " Academy of Management Review, (October, 1976), 15-23.
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192
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193
Nwankwo, G. O . , N ige r i a ' s Financial System, MacMillan, 1981, as reviewed in "Surveying the Rate of Banks, " West Af r i ca , (March 2, 1981), 440-443.
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II
194
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Sunday Sketch, January 4, 1981.
