The relationship between strategic thinking and peak performance in branch banking

Abstract

This study was undertaken within the Branch Banking business unit of YY Bank, a major player in the South African financial services industry. Following the need to drive superior overall performance within branch banking, while creating an aspiration element for top managers who are career orientated, selected branches were grouped into the Associate model. The Associate model can be described as the formalisation of an 'owner–manager' model that empowers the Associate Manager through a defined mandate with broader or higher discretion relating to aspects of its operations. During the recruitment and selection process, it became evident that while candidates maintained a sound operational perspective of the business, their strategic thinking ability was in some instances, somewhat and in others, seriously lacking. The research objective of this study was to determine the relationship between strategic thinking and overall peak performance among Associate Managers. The Stratified Systems Theory (SST), composed by Elliott Jacques (1989) formed the basis and guiding principle of this study. The study constituted a dependant variable - the potential capability score (CPP) and four independent performance measurement variables. A literature study was pursued to establish the relevance of strategy and the contribution of strategic thinking towards overall performance. The view of Thompson Jr, Strickland & Gamble (2010: 17) holds that a strategy–focused business is more likely to be a strong bottom–line performer than a company whose management team does not take strategy–making responsibilities seriously. A further notion about strategic thinking is that it implies thinking 'outside the box' and it precedes strategy formulation. Another citation by Allio (2006: 4), points out that the prime objective of strategic thinking is to place the organisation in a competitive position. The study sample constituted all incumbents who were successfully appointed as Associate Managers. The results of a multivariate statistical analysis suggests no relationship between CPP and overall peak performance. Within the context of branch banking and Associate Managers, certain inherent factors point to this outcome - a key aspect being the largely operational nature of a bank branch. Despite the result and, taking into cognisance certain study limitations, we cannot conclude that strategic thinking does not contribute towards peak performance and recommendations are made for further explorative study. A decade of shifts within the industry has promoted an increase of new entrants. These banks are now, with the aid of technological advancement, becoming sophisticated in their product and service offerings and are able to target and penetrate complex markets. Clearly, competitiveness has heightened which, demands of Branch Banking and the Associate Manager, a new and refreshed perspective towards the business outlook. Associate Managers must now, to a greater degree, interact and adapt to ongoing changes in an increasingly complex and challenging market. This requires an integrated, holistic approach towards business planning and strategy execution. No longer can Associate Managers sustain profitable returns purely through an operational orientation but must adopt a balanced approach in their strategic insight, operational and risk management, resource management as well as strategy execution. For Branch Banking, it becomes increasingly necessary to develop and harness strategic thinking skills among individual managers which, in turn, will facilitate strategic insight and bode well for strategic planning. Further, the business unit should continue to apply the CPP assessment tool in the recruitment process - particularly for managerial appointments – in order to determine individuals' cognitive potential and identify skills development opportunities among incumbents. In an effort to encourage strategy formulation among Associate Managers, the responsibility for certain functional strategies (sales and service) should be decentralised thereby encouraging strategy formulation at local and branch level. Associate Managers have been generally good at executing strategy but the future, in all its possibilities, demands a certain level of strategic insight in order to enable a competitive positioning within the local market.