- 20 Marks
Question
A. If the Board of Directors of a named Savings and Loans Company PLC in Ghana tasks you to make presentation on “How Can a Banker become an Effective Leader”, what would you tell them? [10 Marks]
B. List and compare the various contingency theories of leadership and provide relevant examples that can be observed in the banking industry. [10 Marks]
[Total Marks:20]
Answer
A. Presentation on “How Can a Banker Become an Effective Leader”
In presenting to the Board of Directors of Best Point Savings and Loans Company PLC in Ghana, I would structure my talk around practical steps grounded in Ghanaian banking regulations and real-world challenges like the 2017-2019 sector cleanup and post-DDEP (2022-2024) recovery. Effective leadership in banking requires blending strategic vision, ethical integrity, and people management to ensure compliance, profitability, and resilience under BoG directives such as the Corporate Governance Directive 2018.
Key points I would convey:
- Develop Strategic Vision and Adaptability: A banker leader must align with BoG’s Capital Requirements Directive by forecasting risks like liquidity shortages seen in UT Bank’s collapse. For Best Point, this means leading digital transformation under the Payment Systems and Services Act, 2019 (Act 987), adapting to fintech trends for inclusive lending in rural areas.
- Foster Ethical and Compliant Culture: Emphasize integrity per the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), by modeling anti-corruption behaviors. Leaders at Best Point should implement AML training, drawing from Ecobank Ghana’s successful post-cleanup governance reforms to build trust and avoid license revocations.
- Build Strong Team Dynamics and Motivation: Use motivational techniques from human resource management to reduce turnover, as in GCB Bank’s post-DDEP staff retention strategies. Effective leaders coach subordinates, provide feedback, and promote diversity under equal opportunities policies, enhancing productivity in high-pressure environments like loan recovery.
- Enhance Decision-Making and Risk Management: Leverage Basel III-adapted tools for risk assessment, as in Stanbic Bank Ghana’s handling of cyber risks under the Cyber and Information Security Directive 2020. Leaders should make data-driven decisions, involving teams in scenario planning to navigate economic uncertainties like inflation impacts in 2025.
- Commit to Continuous Learning and Stakeholder Engagement: Pursue professional development via CIBG certifications and engage regulators/customers for feedback. At Best Point, this could involve CSR initiatives for community trust, mirroring Access Bank Ghana’s recapitalization efforts that strengthened leadership credibility.
In conclusion, becoming an effective banker leader involves integrating these elements to drive sustainable growth, with success measured by KPIs like reduced NPLs and improved CAR under BoG notices (e.g., BG/GOV/SEC/2023/05).
B. List and Comparison of Contingency Theories of Leadership with Banking Examples
Contingency theories posit that effective leadership depends on situational factors like follower maturity, task structure, and leader-member relations, rather than a one-size-fits-all style. They are highly relevant in Ghana’s dynamic banking sector, influenced by regulatory changes and economic events like the DDEP.
Key contingency theories, compared below:
| Theory | Key Features | Comparison | Banking Industry Examples |
|---|---|---|---|
| Fiedler’s Contingency Model | Leadership style (task-oriented vs. relationship-oriented) is fixed; effectiveness depends on situational favorableness (leader-member relations, task structure, position power). Least Preferred Co-worker (LPC) scale measures style. | Differs from others by viewing style as immutable, focusing on matching leader to situation via reassignment; less flexible than Path-Goal or Situational Leadership. | In Ghana, a task-oriented CEO at Capital Bank during the 2017 cleanup failed in low-favorableness (poor relations amid scandals), leading to collapse; contrastingly, a relationship-oriented leader at GCB Bank improved morale post-DDEP by building team trust. |
| Path-Goal Theory (House) | Leaders motivate by clarifying paths to goals, removing obstacles; styles (directive, supportive, participative, achievement-oriented) adapt to follower needs and environment. | More motivational than Fiedler’s, emphasizing leader adaptability; similar to Situational but focuses on expectancy theory for performance. | At Stanbic Bank Ghana, directive style was used for compliance with BoG’s Liquidity Risk Management Guidelines during high-uncertainty (e.g., 2023 recapitalization), guiding staff through structured processes to achieve CAR targets. |
| Situational Leadership Theory (Hersey-Blanchard) | Leadership style adapts to follower readiness (ability + willingness); styles: telling (low readiness), selling (low ability/high willingness), participating (high ability/low willingness), delegating (high readiness). | Highly adaptive like Path-Goal but centered on follower development stages; less emphasis on environment than Fiedler’s. | In Ecobank Ghana’s digital banking shift under Act 987, leaders used selling style for junior staff (eager but unskilled in fintech), coaching them to reduce errors, unlike delegating to experienced treasury teams handling Basel-compliant risks. |
| Leader-Member Exchange (LMX) Theory | Focuses on dyadic relationships; high-quality exchanges (in-group) lead to better outcomes than low-quality (out-group). Effectiveness through trust and reciprocity. | Relational unlike task-focused theories; compares to Path-Goal in motivation but emphasizes vertical linkages over broad styles. | At Access Bank Ghana, high LMX with key staff during post-cleanup mergers built loyalty, enhancing performance in customer service; low LMX contributed to turnover at failed banks like GN Bank. |
| Normative Decision Model (Vroom-Yetton) | Leaders choose decision-making processes (autocratic to group-based) based on situation (e.g., time, quality needs). | Decision-centric, differing from style-adaptation theories; more prescriptive than Fiedler’s. | In BoG-regulated crisis like DDEP, GCB Bank’s leaders used consultative decisions for bond restructuring, involving teams for buy-in, improving outcomes compared to autocratic approaches that failed in UT Bank. |
These theories highlight adaptability’s importance in banking, where leaders must navigate BoG directives and market volatility for effective outcomes
- Topic: Managing People and Processes
- Series: APR 2023
- Uploader: Samuel Duah