Almost two years ago I had a leadership conversation with Mike Brown who at the time was fairly new in his role as CEO.
Our meeting happened while the HSBC deal was on the cards, but shortly after fell through. A lot has happened since, as Brown explains: “The Nedbank today is a significantly better organisation in all spheres than two or three years ago, whether you look at it from a shareholders performance lens, a staff engagement and values journey lens, a client lens, a regulatory lens or what we do in the community.” Their vision to become Africa’s most admired bank with sustainable long term success is built around these five components – shareholders, staff, clients, regulators and communities.
At the time of the possible deal they were clear about their strategy, but believed with HSBC the vision could be accelerated. When it did not happen there was, as Brown says “a lot of inward reflection around the importance of making sure that we deliver, so that there can never be any doubt in anybody’s mind about why HSBC did not do the deal.” Brown feels that their performance over the last few years indicates that the decision to not go through with the deal had nothing to do with Nedbank.
Now that Brown has been in the hot seat for almost three years, what has he learnt, discovered or been surprised at? Not much in fact. He had significant experience and exposure to banking in general and Nedbank in particular. He had exposure to various parts of the operations, had been the CFO for five to six years and the transition from the previous CEO to him was seamless and exemplary to say the least. So there were no real surprises. However, if asked he would advise a young or newly appointed CEO as follows: “First of all you have to be clear as to the role of the CEO of any organisation and the way I see it and what we are trying to build here is an organisation that is vision led and values driven. One of the key roles of the CEO is therefore to be owner and custodian of the vision. You can’t do that on your own, but by the time it is crafted you have to be the one that is out there championing that to internal and external stakeholders.”
As he sees it another critical function of the CEO is to focus on creating a “values driven” culture and organisation. What has in a way surprised him is “the role-modelling that happens in an organisation off the behaviours of the leadership group”, says Brown. Crucial to the journey are the values that the leadership team truly live by and the behaviours that they portray. These are modeled or imitated by the rest of the staff.
Yet another crucial role of a CEO is to make sure you have the right people in your team and that they are on the right seats. Brown believes with a clear vision, the right values and the right people in the right seats on the bus you would probably be in good shape.
Nedbank is known for their strong emphasis on values, a journey that resumed almost eight years ago, and that internally is branded as “leading for deep green”. Brown explains: “It started with the executive team going through a particular process around leadership, understanding your influence on others, personal mastery, a very defined leadership and culture values journey for the leadership team of the organisation.” They have now been successful in cascading that further down the organisation to thousands of staff.
Measurement, monitoring and tracking is very important in any organisation according to Brown. And this is a universal truth that all great leaders understand. Brown says: “If you set the aspiration of being vision led and values driven and you push the ‘leading for deep green’ journey, you have to figure out how to measure, monitor and track or evaluate progress.” They came across a specific survey that they have been using consistently for the last five to six years as a measurement system to track their journey around culture and values, “with the outputs being things like values matches and an entropy score in the form of a percentage point”, explains Brown. Their latest measurement came in as world class, which is a great achievement.
The remuneration of leaders is linked to their ability to improve values matches and cultural entropy, as part of their performance appraisals.
Other ways of measuring the health of their internal culture also confirms the suggested improvement, again giving them different lenses through which to measure culture improvement. Brown says further: “We also measure how many staff are lost to competitors verses how many new hires are coming from competitors and are you a net gainer or loser in the talent pool.” Over the last couple of years they have been a net gainer. And finally, they have employees that they have lost but came back, many of them ascribing their return to the positive culture of Nedbank.
Not all organisations focus so intensely on creating a values-driven organisation, perhaps because deep down they just don’t believe it will have a significant impact on their ultimate performance. Brown believes their values focus has impacted performance without a doubt: “It is probably impossible to make the connection scientifically, but certainly I have no doubt that the culture and values journey has played a big part in us retaining people in our organisation, attracting talent and the outcome of all of that has actually been pretty good performance.” He explains further: “If you take Nedbank over a one, three and five year period, I think in all of those we are number one or number two in terms of best performing bank. I think we are number two in year to date one and three, and number one over five years – a good outcome from a shareholder value creation perspective.”
Their strategy to expand into the rest of Africa has evolved significantly. In SADC and East Africa they have expanded the Nedbank franchise, with businesses in Zimbabwe, Lesotho, Namibia and Malawi. They could well expand more in these areas through acquisition and other means. In Central and West Africa they partner with Ecobank and this relationship has deepened considerably. Ecobank bought another bank in Nigeria, called Oceanic and Nedbank supported them in this by providing their holding company with a loan, and so secured the rights to acquire twenty percent of Ecobanks equity. Of course they intend to execute on this.
As CEO of Nedbank and a leader in the current dynamic, fast paced, constantly moving business and sociopolitical environment, Brown sees it as an opportunity. He feels “the world is in a very difficult place right now, economically, with lots of challenges everywhere. I suppose leaders have to find the opportunities for their businesses within those challenges, and focus your people and leadership team on things they can control and make a difference to. What fascinates me is that there is always so much you can do in business, irrespective of what the outside environment is.”
Brown ultimately believes: “At the end of the day, it does not matter what you pay people unless you enjoy coming to work every single day, which means you enjoy what you do, you enjoy who you do it with, you enjoy how you are treated. All those things that have to do with what it feels like around here, which is all about values, behaviour and culture – if this is not right it is not going to work for you.”
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