Corporate growth must be supported by organisational strategy

KUALA LUMPUR: Financial institutions in Malaysia are poised to go regional and from there, globally, and they need to be organisationally equipped to cope with the swift growth, said management consultant and University of Michigan professor of business, Dave Ulrich.

"As a company goes through growth and their business strategies evolve, leadership needs to evolve in tandem," he said at a dinner talk here on Tuesday evening, May 4, as part of the Financial Institutions Director's Education (FIDE) programme organised by Bank Negara Malaysia (BNM) and Malaysian Deposit Insurance Corporation (PIDM).

He cited the example of the Royal Bank of Scotland (RBS) as a company that outgrew its capacity to govern. "They overextended. RBS failed to integrate well, its top-line growth was unsupported by sound infrastructure, and the result was a bailout by the Bank of England," Ulrich said.

A key area boards of directors need to look at when managing an organisational strategy is the company's intellectual agenda.

"Does the company have a clear and simple message? Are leaders communicating it clearly and are they consistent?" asked Ulrich. Companies also need to determine what to share, who to share it with, when and how the information is shared, he added.

Companies should also take into account corporate culture by determining a behavioural agenda in line with corporate strategy. "Teach employees the correct principles and let them govern themselves. Give them ownership of ideas and determine which behaviours to encourage and discourage," said Ulrich.

Next, corporations must adapt their systems to align with their strategy and customers. "These systems cover staffing, training, performance management, decision making and information TECHNOLOGY []," Ulrich said. Finally, the culture of leadership must be bigger than the leaders, he said.

"Leaders must behave as if they are committed to corporate strategy, both in public and in private and they should be held accountable for the delivery of the new strategy," Ulrich said.

Meanwhile, PIDM CEO Jean Pierre Sabourin said Malaysia's target of a higher-level economy must be backed by a leadership that was prepared to guide its growth.

"Through focus groups with leading company directors, FIDE has crafted a programme that addresses issues of concern for them, like risk management and corporate governance. We would like to offer our support to all directors," he said.

Founded in 2008, FIDE is designed with specific focus on financial sector issues with the aim of strengthening skill sets and knowledge of directors, promoting excellence, supporting directors with a sound understanding of current issues and developments in the financial industry and of creating an environment for directors to learn from one another.

Since the programme was launched, 160 directors have gone through the training modules and a further 50 have signed up this year. For more details log on to www.fide.org.my.