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LEADSTAR UNIVERSITY COLLEGE

School of Graduate Studies


MBA
Transformational leadership

Assessments on Leadership Styles of CBE Managers and Its Strength and


weakness Case study on kebena branch

PREPARED BY: EteneshBekele (ID – BA grd/63/04/08)

Email: Eten6543@Gmail.com

February, 2018

ADDIS ABEBA
Table of contents Page

I. Introduction

1. Background of study …………………………………………………………...... 2

2. Objective of the paper……………………………………………………..……... 5

3. Research Methodology…………………………………………………………… 6

4. Research Hypothesis ……………………………………………………….……. 6

5 .Selection of sample………………………………………………………………. 6

6. Data Analysis……………………………………………………………….…..… 6

7. Conclusion ………………………………………………………………………. 10

8. Recommendation………………………………………………………………… 11

9. Reference…………………………………………………………………………. 12
Abstract

Over a period of time banks have been using different types of leadership styles extensively to
provide products and services to the customers effectively. This study attempts to see the
consequences of leadership styles of CBE in Effectiveness of Banking Services and its strength
and weakness. Bank internal customers like employee’s, middle level and senior managers were
the primary source of data and the data was collected and analyzed using interview, and general
observation . As per the findings of this study it is observed that The study has come out with the
conclusion that middle level managers have a compassionate (kind) authoritarian style, the senior
management has a consultative style, and the managers belonging to the senior management and
have a participative leadership style which clearly indicates that the style of leadership varies with
the hierarchy of managers, Need for expertise and training and giving equal opportunity for
employees are considered as the most and the least risk associated with bank leaders.
1 Introduction
1.1.Background of the Organization
Modern banking was introduced to Ethiopia in the early 20th century, during the regime of Emperor
Minilk II. It was begun in Ethiopia in 1905, when the bank of Abyssinia was first established in
Addis Ababa under a 50 year franchise agreement with the British owned National Bank of Egypt.

On August 1942, a charter was granted to the state Bank and was published on 30th November
1943 under general notice No. 18 of 1943.

Commercial Bank of Ethiopia was legally incorporated as a share company on December 16, 1963
per proclamation No. 207-1955 of October 1963 of the former state Bank of Ethiopia. In 1974
CBE merged with the privately owned Addis Abeba bank since then ,it has been playing
significant roles in the development of the country.

Finally, according to the proclamation No. 184 of August 2, 1980, the Addis Bank and the former
Commercial Bank of Ethiopia S.C were merged to form the sole commercial Bank in the country,
the present day Commercial Bank of Ethiopia.

Currently, Commercial Bank of Ethiopia (CBE) is 100% state owned financial organization and
the leading commercial Bank in Ethiopia with an asset of Birr 384.60 billion as on June 30, 20116
G.C, holding more than 13.3 million account holders and number of mobile and internet banking
users also reached more than 1,352000 as September of30th 2016 (68%active users).active ATM
card users reached more than 3 million (61%active users). The bank currently has more than
30,000 talented and committed employees with different qualifications, more than 1160 branches
stretched across the country and has strong correspondent relationship with more than 50 renowned
foreign banks .The bank also has a SWIFT bilateral arrangement with more than 700 other banks
across the world. There are more than 20 money transfer agents who are working with the bank.
The bank also expands its territory outside of Ethiopia in Sudan and has been in the business since
2009 GC. The bank also has strong and long standing relationships with many internationally
acclaimed banks throughout the world.The bank is providing various products and services to its
customers such as: Like Deposit,Foreign exchange transactions, Moneytransfer,Loans, E-banking
service: Issue letter of credit, Buy and sell negotiable instruments, and etc…
Vision of CBE

“To Become A World-Class Commercial Bank By The Year 2025 ”

Mission of CBE

"We are committed to best realize stakeholders’ Values through enhanced financial intermediation
globally and supporting-national development priorities, by deploying highly motivated, skilled
and disciplined employees as well as state of the art technology. We strongly believe that winning
the public confidence is the basis of our success."

Corporate Values of CBE are:

1. Integrity
2. Customer Satisfaction
3. Employee satisfaction
4. Learning Organization
5. Teamwork and Collaboration:
6. Public Trust
7. Value for Money
8. Decentralization
9. Corporate Citizenship
Goals of CBE

 Strong and Stable Financial Position and Enhanced Developmental Partnership,


 Stakeholder Responsiveness,
 Process Efficiency and Effectiveness, and
 Motivated and Proficient Employees.”
1.2 Background of the study
Leadership, defined, as a process whereby an individual influences a group of individuals to
achieve a common goal. Leadership style is the way in which that process is carried out.
Performance is the accomplishment and execution of tasks. According to Albrecht (2011),
performance is the extent to which an organization achieves a set of pre-defined targets that are
unique to its mission. Leadership style is a key determinant of the success or failure of any
organization. Numerous literatures on management mention various leadership styles and
frameworks such as autocratic leadership, bureaucratic leadership, charismatic leadership,
transactional leadership, and transformational leadership, all of which are based on several
different approaches to leadership. Each style of leadership affects organizational performance
differently; some helping organizations succeed and others hamper their growth leading to
failure.
Whereas many different leadership theories have emerged from the last century, early theories on
leadership concentrated on identifying qualities that differentiated between leaders and
followers. Subsequent theories on leadership looked at other variables such as situational issues
and levels of skill. Over time, a number of theories on leadership and performance have been
proposed. Bratton (2007) observes that leadership theory types include two axes: of those which
are related to organizational effectiveness and tend to be more prescriptive in orientation, and of
those which are primarily analytic and meant to better understand the concept. However, it is not
always easy to classify any of the theories as one or the other exclusively.

A bank is an institution that provides financial services, including issuing money in various forms,
receiving deposits of money, lending money and processing transactions and the creating of credit.
Commercial banks are financial intermediaries that serve as financial resource mobilization points
in the global economy. The role of banks in an economy is paramount because they execute
monetary policy and provide means for facilitating payment for goods and services in the domestic
and international trade.
Statement of the problem

The subject of leadership has for a long time occupied a central role in the study of organization
and administration. It all started innocently enough with psychological and sociological scheme
of the nature of leadership in very general terms. In accordance with the trait behavioral and
situational leadership theories discussed in literature there are three major trends in leadership
studies, in the first phase, leadership is analyzed in terms of the personally his behavior, ability,
dynamism, perceptions and attitudes. Later, social scientists looked at the pattern of a leader's
interaction with others. A major omission from the research literature on leadership is the
detailed consideration of situational, structural, and environmental circumstances, which explain
variations in leadership style. Therefore, the researcher is interested to assess the leadership
styles that are currently employed by kebena branch by indicating the strength and weakness of
the leader in relation to the leadership style. The researcher has observed some problems faced in
connection to the leaders and managers of the bank at different level. For instances delay of
decision making, service failure, in appropriate working environment and customer complaints.
The above research problems are interested and relevant and unless they are investigated and
resolved they may create other problem on the overall performance of the employees as well as
that of the branch and the bank at all. Therefore, a need is raised to assess the leadership style of
CBE leaders.
Objectives of the Study

General objectives
The general objective of this study is to assess and evaluate the leadership Leader ship styles of
managers in CBE and their strength and weakness

Specific objective
Based on the general objective of the study the following specific objectives are generated:

(I) To assess the leadership styles reflected by CBE leaders


(ii) To assess how personality traits of bank managers affect their subordinates.
(iii) To see strength and weakness of the leadership style possessed by CBE leaders.
Research Methodology
The data collection method for this study includes both primary and secondary data’s. The
primary data is collected through conducting interview with managers and by distributing
questionnaires to employees. Whereas secondary data is collected from books and journals as
well as websites.

Hypothesis
The study is based on the following assumptions as follows:
H01: There is correlation between manager's position in the hierarchy and their leadership style.
H02: commercial bank of Ethiopian managers does not possess the personality traits of leaders.
H03: Leadership style has positive effect on performance of employees.

Selection of Sample

The sampling techniques for the study is based on probability simple random sampling so as to
Create equal opportunity of being selected from Addis Ababa city CBE branches based on
lottery method Kebena branch is randomly selected. And the sample size of the study is 20.

Analysis of Data

Testing hypothesis 1 There is correlation between manager's position in the hierarchy


and their leadership style.

As to the data collected through distributing questioner and conducting interview with managers
there is a correlation between managers position in the hierarchy since a significant or more
than half amount of employees stated that low level managers and middle level managers are
tend to be more friendly and help full while top level managers are autocratic . Therefore this
hypothesis is accepted.
Testing hypothesis 2 Managers of CBE do not possess leader traits
As to the data collected from interviewing managers and the questionnaires distributed the data
was analyzed and discussed the results are as follow: more than half of the managers of CBE
are depicted to be arrogant, less socially interacted and not helpful as well as not willing to share
experiences with their followers.

Thus, Hypothesis 2 is rejected because more than half leaders of CBE were displayed to posses
less leadership trait.

Testing Hypothesis 3 Leadership Style has positive impact on Performance of


Employees.
In testing the impact of leadership styles on performance of employees the following data are
collected and analyzed accordingly: - More than half the employees or subordinates displayed
that whenever their leaders posses expertise and help them on their day to day operations as well
as share experiences with their leaders they become more out performers . And their exposure to
failure and making mistakes reduced or totally eliminated.

Therefore, this hypothesis is accepted since the leadership style and performance of employee’s
co vary. And their relationship is positive.

 Organizational leadership Culture of CBE

Organizationalleadership culture commercial banks of Ethiopia head office by considering the


General information from Employees, Bank trailing materials and Practical assessment about the
bank I had the following finding about the Bank leadership Culture.

❖ Organizational leadership culture in its positive attributes can provide many contributions in

performances of the organization. However these finding shows that the current organizational
leadership culture in the bank has weak contribution improving accountability, Commitment to the
organization in creating good working relationship empowerment of staff and to enhance job
satisfaction from this one can conclude that the current organizationalleadership cultures are not
strong enough to enhance bank’s performance.

❖ The finding indicated that the positiveleadershipstyle of the bank has been measured based on

the following parameter accountability, fairness, trust among the colleague, belongingness to the
organization, good work relationship performances based management and empowerment of staff
is weak therefore, trust among colleague empowerment of staff looking all staff member based on
their knowledge, skill and commitment encourage or developed trust among the college and
fairness is mandatory. These activities such as accounting, belongingness to the organization, good
working relationship are not weak but they also need improvement which will lead together the
bank to great achievement. Experience easily transfer, commitment and teamwork among the staff
is strong for given task or assignment value of being an employee of Commercial Bank of Ethiopia
managers.

❖The negative value ofleadershipstyle, satisfaction is also measured by performance and attitude

towered the organization. The following are indicated of the consequence of negative
leadershipstyle of the Bank managers include: - absences of the confidence in the professional
employee, lack of recognition for employee effort on hiring, promotion and transformer, job
satisfaction and activates are not implemented in clear rules and regulation, rumor and gossip
increases on administrative issues.

❖ The extent of the positive and negative leadershipstyle influence on the employment

performance is subjective but it encourages or affects the following value that have a key role in
organizational exercise they are honesty, loyalty, integrity, transparency, impartiality, respecting
the law, exercising authority responsiveness, serving the public interest and exercising leadership.

 Organizational leadership styles of CBE

A) Celebrate Employees

As a service organization the bank achieved annual goals all employees their hard worker
celebration reminds the employees that value their work

A) Alternatives to Organizational Change

For some workers, change might as well be synonymous with failure and disruption. Change
management has become a discipline in to itself because bank encounters such resistance to
change.
B) Motivating Employees

Bank motivated their employees with different thing like annual bones, promotion, Better quality
of work life, Opportunity for growth and promotion etc…

C) Reward Packages to Motivate Employees

To get the maximum performance from staff, offer reward packages as motivation. Employee
reward and recognition programs need to be ongoing to be effective.

Conclusion
Commercial bank of Ethiopia is in the business of providing banking services to individuals,
small businesses and large organizations. Today commercial bank of Ethiopia is more extend
than ever. But, there are several problems in the banks which have been discussed earlier and
major problems are increase in control and guidance through managers. The researcher has taken
a problem relating to leadership styles in the commercial bank of Ethiopia and their relationship
between personality traits, behavior and attributes of bank managers. The study is based upon
hypothesis.
The study has come out with the conclusion that middle level managers have a compassionate
(kind) authoritarian style, the senior management has a consultative style, and the managers
belonging to the senior management and have a participative leadership style which is clearly
indicative that style of leadership varies with the hierarchy of managers. Commercial bank of
Ethiopia is a bank engaged in classic business of accepting deposits and giving loans, where the
primary responsibility is to help business by raising loans.. Leadership styles of Managers' in
banks at various levels provide a soundbackground to the banking industry trait, behavioral and
situational leadership studies.
5. Recommendation

In view of the various research and general observation the following constructive suggestion and
recommendation are made.

■ Based on the positive and negative cultural value parameter which are accountability, fairness,
trust among the colleague, belongingness to the organization, good work relationship and
performance based management and empowerment of staff accountability should be developing
by clearing stated to performance the given tasks. Fairness and trust among the colleagues should
be increased by setting and implementing rules and regulation among the staff consistency.
Belongingness To the organization should be created by providing without any discrimination and
violating of the existing rules and regulation. Good working relationship among the staff,
providing group working and arranging get together among each other which one can understand
the other performance.

■ The consequence of the positive or negative cultural should be reflected on the performance job
satisfaction and on the attitude towered the organization to have the positive cultural or elimination
the negative one the Bank should clearly stated its vision, mission, strategy’s and value which
helps rules and regulation that will create accountability, transparency, confidentiality, impartiality
and exercising legitimate authority.

■ The Bank should openly communication to employee about the value of desired and establishing
a clear published producer for all individual to follow when they believe the present practices is in
compatible with the organization value and principle. Furthermore, training is vital for an
organization that desires effective cultural change.

■ In the Commercial Bank of Ethiopia it requires change on the attitude of the employee and
official on the existing rule and regulation it need amendment in order to evaluated employee in
transparent way which will devolved trust and openness among staff and reduce rumors and gossip
on administration issue.The bank should international bank motivational style and share bank leadership
method to achieve their goal properly.
Reference

(Zerayehu, Kagnew, &Teshome, 2013).


Panchanatham et al. (1993), leadership styles
Commercial bank of Ethiopia(CBE) guideline, brushers’ and websites.