Change Management Initiatives and Post-acquisition Performance of National Bank of Kenya

Abstract

Strategic management literature accentuates the need for change management in the post-acquisition stage, showing that a poorly implemented change management process is a key cause of poor post-acquisition performance. Kenya's banking industry plays an important role in supporting development and is a vital driver of economic growth. However, several banks have been forced to merge their operations on mutually agreed terms, while some have acquired other institutions with about seven mergers and acquisition deals closed within the last six years. This study sought to determine the effect of change management initiatives on post-acquisition performance of National Bank of Kenya. The study was guided by the Lewin’s change model and the Kotter’s change management model. The study adopted a case study research design and used primary data, which was obtained through an interview guide. The data was collected from the senior management team members namely; the director in charge of finance, director in charge of credit and risk, corporate banking director, retail banking director, marketing and corporate affairs director. Thematic analysis was used analyze the data were the generated responses were categorized based on the identified research topics and objectives. The findings revealed effective communication was the precursor of all other change management initiatives followed by leadership, employee training, stakeholders’ involvement and up line support. The findings further revealed that change management initiatives largely affected the bank’s post-acquisition performance as NBK recorded an increase in revenues, reduction of non-performing loans as well as an increase in employee morale and motivation. In addition, the finding documented that change management initiatives greatly led to reduction in customer complaints, the bank was able to regain lost customer confidence, and had recorded improvement in its capital and liquidity requirements due to the effective adoption of post-change management initiatives. Further, the results indicated that successful implementation of post-acquisition change management initiatives in the banking sector leads to increased revenue, maximizes efficiency, increases profits, creates customer satisfaction, improves employee morale, and enhanced quality excellence. The study concluded that communication is the key change management initiative, which supports other change management initiatives including leadership styles, employee involvement and participation, employee training and feedback, seeking employees and stakeholders’ support. The study also concluded that change management initiatives largely affected NBK post-acquisition performance in terms of investment returns, profitability growth, liquidity, capital adequacy, reduction of non-performing loans, customer satisfaction, and reduction of customer complaints, competitiveness, employee development, employee growth and productivity after acquisition by KCB group.