Aligning Structure with Strategy
In 2009, FirstBank embarked upon a major initiative to redesign the operating structure of the Bank, with an emphasis on market-facing business units. A critical objective was to improve segment specialisation organisationally from top to bottom, in line with international best practices and the demands of the rapidly evolving local marketplace. A new structure for the Bank has been proposed with implementation to commence in 2010. The fundamental difference will be the migration from geography as the primary organising axis to market segment (with geography as a secondary axis – e.g., several regional managers will now oversee area managers and branches within the retail distribution structure). The new structure will refocus the Bank's commercial activities along five dedicated Strategic Business Units linked to nine discrete customer segments, as illustrated in the accompanying diagram.
The five Strategic Business Units (SBUs) are as follows: Institutional Banking, Corporate Banking, Retail Banking, Public Sector North and Public Sector South. The Institutional Banking business unit will serve the largest private sector companies. It will be organised along industry lines and located close to major client clusters. The Corporate Banking business unit will serve the next largest segment of private sector business clients, and will be organised along geographic lines (with revenue and other indicators delineating the border between 'Institutional' and 'Corporate'). Public Sector North and Public Sector South will serve Federal and State Ministries, Departments, Agencies and Parastatals. The Retail Banking business unit will also be organised along geographic lines, and will serve all retail segments including high net worth individuals, affluent customers, mass market, small businesses ('enterprise'), and local governments.
Fundamentally, FirstBank believes that the new structure represents an important foundation. However, the Bank realises that it will require much more than structural change to attain its business objectives. To unlock the power of the new structure, several critical 'enabling' factors will need to be focused on in 2010:
- Capabilities: Ensuring that the Bank possesses the requisite capabilities to be competitive, and optimising the deployment of personnel across the organisation on the basis of needs, competencies and individual interests
- Performance management: Tailoring the Bank's existing performance management system to the needs of each new SBU, and ensuring that there is visibility into profitability by SBU and at even more granular levels
- Management information systems: Ensuring that MIS systems are upgraded to reflect new data requirements and to facilitate easy analysis/querying of databases
- Infrastructure/technology: Modifying the head office, branches and field offices to accommodate the physical and technology infrastructure requirements of the new structure.
Proposed Bank Structure – Five strategic business units
- 1 Institutional Banking
- 2 Corporate Banking
- 3 Retail Banking
- 4 Public Sector North
- 5 Public Sector South
- Operations
- Risk
- Finance (including Treasury)
- Company Secretary
- Human Capital Management
- Legal
- Corporate Transformation
- Internal Audit*
- Strategy and Corporate Development**
- Corporate Communications
* Reports to Board of Directors via Board Audit and Risk Assessment Committee.
** Functions reporting under the Group Managing Director due to the Group-wide scope of their business.
In addition to the above, two major business units/functional initiatives are imperative and will receive added focus in 2010:
- Operations centralisation: The ongoing centralisation of operations becomes even more critical under the new structure because it enables the Retail bank (which will run branches and will be headed by a single executive director) to focus on sales/marketing versus operational activities. This will also facilitate and deepen operational expertise and skill-sharing.
- SBU strategy redefinition and implementation: Each SBU will be required to craft an updated commercial strategy with an emphasis on commercial (sales/ marketing) elements, optimising the product portfolio, redefining channel strategy (mix, formats, pricing etc.), and optimising marketing spend efficiency and effectiveness, with all of the above driven by deep customer insights. Implementation of each strategy will be tracked, with soft and hard metrics monitored in the performance management system.