I did find the inevitable warts in this star player of a bank.
Top on the list of its' weaknesses emerges from the style of management. The tight-control-one-man show that built the institution from nothing (actually Equity missed being put under receivership by a whisker—but I'll explain that story in a minute) to what it is today is still very much in place.
This is not the place where staff can share ideas and suggest things. Everybody knows that doing so is way too dangerous. That is how such talented members of staff like Kariuki Nguru and more recently, Joyce Sang lost their jobs. The way to keep your job at Equity is to do exactly as you are told and to oil the right egos frequently enough. This is more than a little dangerous for an institution that has reached the size that Equity Bank has.
It is instructive that this was the same problem that Uchumi Supermarkets had. The dukawalla management style of former CEO Suresh Shah was good for raking in the profits but skills were hardly passed on down to lower cadre workers. Interestingly this is something that Nakumatt Supermarkets have managed to do rather successfully and it augurs well for their future.
Increasingly other banks like Barclays and Standard Chartered have started showing immense interest in Equity Bank staff and are more willing to offer better pay packages and working conditions which a number of Equity employees have already quickly accepted. The question is what will be the long term impact of this on the performance of the bank? One thing is for sure, they will not come out of it unscathed.
Indeed it is a little surprising that CEO James Mwangi who is said to have learnt a lot from Alnoor Kassam's TradeBank did not learn Kassam's human resources motivational secrets, or rather decided to ignore them. Many Kenyans think of TradeBank as the failed bank but the truth is that only a huge loan that a prominent politician refused to pay brought down this very innovative bank. Employee of the month programs where ordinary low cadre employees would win huge cash prizes was just one of the things Kassam put into place to build a staff team that helped him churn profits at a dizzying rate.
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One sign that Equity's Mwangi has very different views about human resources is the story behind the low interest loans given to staff to purchase Equity Bank shares. It is said that the move was mainly done to technically disqualify staff members from joining any workers' union you don't want to join a union against a company where you are a shareholder do you? Of course the deal also had the usual stringent requirements, in the case of Equity, the staff members cannot sell off the shares for 5 years.
This attitude deep within Equity Bank management is not unusual in a country where there is such a huge unemployment problem as in Kenya today, mainly because it is very easy to replace disgruntled and non-performing employees. However it is the sort of thing that inevitably comes back to haunt an organization sooner or later.
The anti-Equity emails mention the banks involvement with government. With the recent history where banks that have gotten too close with government have ended up in trouble, this statement on its' own has no doubt made many Kenyans nervous. The list of casualties is way too long and includes TradeBank and Trust Bank to name two prominent examples.
It has even been suggested that this is more of a tribal thing than anything. What those who have been spreading these rumours have conveniently forgotten to mention is the bank's close association with dozens of NGO's and United Nations bodies who admire its' amazing business model and the fact that it is the largest lender in the region to low income individuals and small often informal enterprises. Naturally many of these organizations have found Equity, with its' mission statement of being a micr0 financier, the best partner to work with. Even Bill Gates is working with the bank on a number of his projects.
With this kind of attention, the government would have to pay attention to the bank and would also be easily convinced to channel funds for programmes through the organization irrespective of the tribes that most of the top management belong to.
I am convinced this is a very sad case of where politics has reared its' ugly head on such a successful and genuinely well run financial institution.
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