Industrial Conflicts in Nigerian Deposit Money Banks: Benefits and Challenges

INDUSTRIAL CONFLICTS IN NIGERIAN DEPOSIT MONEY BANKS: BENEFITS AND CHALLENGES

by

OLUGBEMI, Eunice Tope, IKPEFAN, Ochei Ailemen, andEVBUOMWAN, Grace Ofure.

Department of Banking & Finance, Covenant University, Ota, Ogun State

ABSTRACT

Conflict can either result to positive or negative outcomes in a firm based on how it is managed. Only when the source is known, can it be properly managed. This study examined the challenges that could possibly lead to industrial conflict and the benefits of a well-managed conflict. Five (5) bank branches within Ota were used in collecting data through the administration of questionnaire and a total of 50 questionnaires were administered and collected. Data collected were analyzed using descriptive statistics generated using the SPSS statistical package. The result showed that the major challenges faced by banks are the challenge of handling difficult persons and situation, as well as the challenge of personality differences. The major benefits derived from industrial conflict are enhanced communication among groups and development of new ideas and motivation. The study recommended that these challenges be recognised and a framework provided to effectively manage these challenges to improve the firm’s performance.

Key words: Deposit Money Banks, Unitary Perspective, Personality Differences

1.1 INTRODUCTION

Conflicts in banks are inevitable as the bank is made up of individuals from different backgrounds, with different beliefs and social values. Conflict can occur between employees and employers, top management and subordinates and also between employees of banks. Organizational conflict arises when the target, welfare or principles of different persons or teams are unsuited and they block or tend to aggravate each other’s attempt to accomplish their goals. These actions and reactions make conflict an unavoidable part of an organisation (Jones et al, 2013). Schramm-Nielsen (2002) defines conflict as a situation of severedivergence and disagreement about something alleged to be important by at least one of the parties involved. Arguments or misunderstandings are common in the workplace but the management and effect of such misunderstanding on the firm is very important.

Handling employee misconduct is a very critical task to be performed by the senior managers. Misconduct and other offensive behaviors often lead to decreased levels of productivity as they affect the individual performance of the employees.The causes of industrial disputes can be broadly classified into two categories: economic and non-economic causes. The economic causes will include issues relating to compensation like wages, bonus, allowances, and conditions for work, working hours, leave and holidays without pay, unjust layoffs and retrenchments. The non economic factors will include victimization of workers, ill treatment by staff members, sympathetic strikes, political factors, indiscipline etc.

Conflict has been in existence for a long time and cannot be erased; it can only be well managed to bring about positive changes in the firm. Fadipe (2000) define conflict as a type of disagreement in a firm between two persons (or teams) who have reasons to interact officially or unofficially. Conflict can affect a banking firm positively or negatively. When it is a positive conflict, it will enhance the performance of the banks and amongst other benefits, create mutual understanding among individuals and groups but where the effect is negative, it will deter bank performance.

Nigerian banks have been faced with issues of casual employment amongst indigenous employees, unrealistic deposit target given to new employees, personality differences, adapting to changing environment such as globalisation and technology, challenge of different faith and culture, challenge faced in handling difficult people and situation etc. These often resulted in conflict and trade union had to call out its staff on strike where collective bargaining failed. The research questions addressed in this study are as follows: Are there issues personality differences, changing environment, challenge of different faith and culture that affects employees?The research questions also looked at the challenges faced by Nigerian deposit money banks due to conflict and what are the benefits enjoyed by deposit money banks in Nigeria as a result of conflict?This study reviews the benefits and challenges of conflict in Nigerian deposit money banks using employees of five banks (UBA, Union bank, First bank, Heritage bank, and GT Bank) as case study. The study will add to the body of previous knowledge and assist bank management in handling industrial relations issues in the banking industry. The remaining part of this paper is divided into four sections. Section two and three dwells on literature reviewand methodology. Section four dwells on discussion of finding while Section five ends the paper with conclusion and recommendations.

2.1 REVIEW OF RELEVANT LITERATURE REVIEW-Conceptual, Theoretical and Empirical Framework

Conceptual Framework

Industrial conflict occurs when management and workers are incompatible or have irrevocable views or issues. Conflict is the intentional attempt to contest, defy or pressurize the will of another or others. According to Rahim (2011), conflict takes places when rivalry among individuals, groups and the general public become edgy, cognisant, and conscious and they identify their opponents and their activities are destructive having disassociated relationship. Conflict can also be defined as a discrepancy between the employees of a firm concerning the method or procedures to be used in achieving certain goals and objectives. Fisher (1990) define conflict as an inaptness of goals or values between two or more parties in a relationship, combined with attempts to have power over each other and aggressive feelings toward each other.

Jambrek and Penić, (2008) conceive conflict as a process of social interaction and a social situation, where interests and activities of participants (individuals or groups) actually, or apparently, confront, block and disable the realization of one party’s objectives. Drawing upon Donohue and Kolt (1992), conflict is defined as “a situation in which interdependent people express (manifest or latent) differences in satisfying their individual needs or interests and they experience interference from each other in accomplishing these goals” (Rose et al.,2006). Kilmann (2008) identifies three sources of conflict. These are structural conflict (conflict arising out of the need to manage the interdependence between different organizational sub-units); role conflict (conflict arising from sets of prescribed behaviour) and resources conflict (conflict stemming from interest groups competing for organizational resources).

Usefulness (Benefits) of Conflict

According to Rahim (2011); conflict (aside the negative effect) may serve the following useful purposes;

1. Organisational advancement: conflicts can lead to advancement in an organisation as it is an essential tool to make an organisation dynamic and progressive.
2. Conflict enhances cooperation: when conflicts occur in a firm, the deviating groups or workers come together and decide on a lasting solution to the reason behind the conflict or disturbance and hence, cooperation (Rahin, 2011).
3. Bring positive change: conflict bring about positive changes in an environment. Some changes can only occur if the people confront it and peace in absolute form is achievable only when the conflict occurs.

Business firms can benefit a whole lot from conflict aside the depressing effects of conflict. Conflict can be said to be time consuming, lead to waste of resources, and in its most severe form, loss of lives. Since conflict is inevitable even in our personal lives as individuals, proper management of conflict is mandatory. Well managed conflict can lead to positive results such as increase in remuneration, group or team effectiveness, morale boosting, better relationships and communication. It can also encourage innovations and brilliant ideas that can enhance firm’s performance. For the purpose of this study, the benefits to be considered are; increase in remuneration, enhanced communication, development of new ideas and motivation, and solution to pressing problems.

Challenges of Conflict

In the course of the daily operations in the banking industry, the banks encounter issues that pose as a challenge and hence lead to conflict. Various challenges encountered by the banks includes but not limited to;

1. Ineffective communication-when employees cannot decode the correct information passed across from the management, it can lead to various reactions as to what the employees understood from the information might be different from that passed by the management.
2. Culture- culture addresses the way things are in a particular environment. It is a way of life and a deviation from the known culture will lead to a clash. Culture in banks should be built in such a way that it embraces change, strategy and innovation.
3. Change-conflict arises when there is a change in the state of affairs where change is seen as a risk. Change can be in bank personnel, products or services rendered management, strategy, etc. Where the change process is irritated, this may produce ahostilefeedback- clash rather than escape (Hilda, el. Al, 2012).
4. Unclear objectives- where the objectives to be achieved are not clearly stated, it can lead to waste of time and resources hence, disagreement among team members and top management.
5. Leadership style- the style of leadership in a firm will determine the level of disagreement faced. According to Rensis Likerty (four management theory), there are four leadership styles ranging from system 1 to system 4. System 1 is the exploitative or authoritarian leadership, system 2 is the benevolent authoritative leadership, system 3 is the consultative management, and system 4 is the participative management. RO
6. According to Rosefaith (2013), there also a challenge of Competition of scarce resources. Scarce resources in an organization could pose be a big challenge too because employees compete for those scarce resources causing conflict among them. Competition can be defined as when two or more groups or organizations vie for the same resources. In business these ―resources‖ could be sales, market share, contracts, employees, and ultimately, profits. In the non profit sector, the competition might be donations, grants, clients, volunteers, and even political influence. The Challenges of changing environment [globalization and technology] is also another one in conflict management where globalization has caused change and restructuring so that Banks operate more flexibly. There has been a rapid growth in virtual teams, with people from different backgrounds and cultures working across vast regions and time zones Volatile, fast-changing workplaces. Email and electronic communication are the most practical ways to connect, but these can be anonymous and lead to misunderstanding.

For the purpose of this study, the focus will be on four major challenges which are; challenge of personality differences, different faith and culture, changing environment in terms of technology and globalization, and challenges faced in handling difficult people.

Classification of Conflict

According to Brad (2013), there are four classifications of conflict. They are;

1. Interpersonal conflict- refers to a conflict between two persons. This comes about due to differences amongst people. We have different personalities which generally result to mismatchedpreferences, decisions and opinions. This type of conflict can help in individualdevelopment or developing relationships with others through adjustments in differences.
2. Intrapersonal conflict- occurs within an individual. The incident takes place in the person’s mind. It is a type of conflict that is emotional and mental involving the individual’s thoughts, values, principles and emotions. This type of conflict can be complicated to handle if it is difficult to decode your inner struggles. It leads to restlessness and discomfort, or can even cause gloominess. If this is the case, it will be best to seek help by communicating with other people. In the end, when the individualis out of the situation, he or she can become more empowered as a person. Thus, the experience evoked a positive change which will help in personal growth.
3. Intra-group conflict-this type of conflict occur among individuals within a team. The incompatibilities and misunderstandings among these individuals lead to an intra-group conflict. It arises from interpersonal disagreements or differences in views and ideas (e.g. in a presentation, members of the team might find the notions presented by the one presiding to be erroneous due to their differences in opinion). Within a team, conflict can be helpful in coming up with decisions which will eventually allow them to reach their objectives as a team. However, if the degree of conflict disrupts harmony among the members, then some serious guidance from a different party will be needed for it to be settled (Brad, 2013).
4. Intergroup conflict- takes place when a misunderstanding arises among different teams within an organisation. For instance, the sales department of an organisation can come in conflict with the customer support department. This is due to the varied sets of goals and interest of these different groups. In addition, competition also contributes to intergroup conflict. There are other factors which stimulate this type of conflict. Some of these factors may include a rivalry in resources or the boundaries set by a group to others which establishes their own identity as a team.

All these four classifications of conflict are present in all business organisations or firms, including the banking industry. Conflict can be as a result of power, scarce resources, differences in views, values and beliefs, etc.

Theoretical Framework

There are various schools of thought on industrial conflict but this paper will be discussing two perspectives of such theories which are; the unitary perspective and conflict perspective (pluralist theory).

Unitary perspective- the unitary perspective views the organisation as an integrated structure where loyalty is demanded from all employees. It is based on the assumption that management and staff, and all members of the organisation share the same objectives, interests and purposes; thus working together as a team, towards the achievement of a common goal. In an organisation, there is only a single source of authority which is usually the management, and opposing leaders are non-existent (Ross and Bamber, 2009). Organisations are seen as consisting of teams that are working together for mutual goals, and there are also no conflicts of interests between managers and employees (Leat, 2001). Trade unions are deemed as unnecessary and conflict in this perspective does not exist or seen as irrational and can be avoided by a healthy and good management.

Figure 1: Unitary Perspective

No conflict

EMPLOYERS / NO TRADE UNION / EMPLOYEES

Presence of conflict

Conflict is seen as irrational and avoidable

Source: Compiled By the Researchers

A major weakness of this theory is the failure to realize that there are power differences between employers and employees which will generate diverse kinds of conflicts (Kessler and Purcell, 2003).

Conflict perspective (pluralist theory)- conflict theory is a more realistic theory which states that conflicts exist in a society and in companies, and that it is necessary to have a theoretical frame to understand conflicts and not just declare them as irrational like the unitary theory assume. A modern conflict theory is the pluralist theory. Pluralist theory sees the organisation as being made up of powerful and conflicting sub-groups; management and trade union. Pluralist theory believes that the place of work is composed of diverse sets of beliefs, values, attitudes, and behaviours (Giles, 1989). In capitalist societies, this divergence of interests has led to the formation of trade unions since conflicts are inevitable because of the inherent competing interests (Dabscheck, 1989). Conflict can be resolved by collective bargaining and if well managed, could be channelled towards positive change. Trade unions are legitimate representatives of employees, and they are viewed positively because they help employees emphasize their decision-making power (Leat, 2001).

What exists in the Nigeria deposit money banks is the conflict perspective. We have the management and the trade union such as the national union of banks, insurance and financial institutions employee (NUBIFIE) and the association of senior staff of banks, insurance and financial institutions employee (ASSBIFIE). Since the banking environment is made up of people with different views, management of conflict is crucial to the firms in other to benenfit from its effects.

Figure 2: Conflict Perspective

Positive effects

Good management of conflict

EMPLOYERS / / TRADE UNION
NUBIFIE / ASSBIFIE
EMPLOYEES

Poor management of conflict

Negative effects

Source: Compiled by the Researchers

Empirical Review

The commonly known types of industrial conflict are conflict of interest and conflict or dispute of right. Ingo (2004) posited that conflict of interest, market discipline in financial firms, and problem of conflict of interest misuse should be addressed through improved transparency and market discipline. As efficiency and fairness in the financial market suffer, the financial intermediaries also suffer. When competition is perfect and when markets are fully translucent, exploitation of conflicts of interest cannot reasonably take place. Barajas and Catalan (2011) further discussed the interplay of conflict of interest and market discipline between pension funds and the banks, considering private pension funds as large depositors. Private pension funds as large depositors in European countries have a large influence on market discipline.

Market discipline as explained by Barajas and Roberto (2000) is a situation where “depositors withdraw deposits in response to increases in banks’ risks as measured by deterioration in bank fundamentals”. Pension funds can influence market discipline in banking systems positively by using the advantage of being large and sophisticated to monitor (enhance) market discipline, penalizing banks for fundamental weaknesses or excessive risk-taking by withdrawing deposits. They can also influence market discipline negatively through conflicts of interest in relation to banks. Pension funds could favour connected banks, undermining instead of enhancing market discipline.

Ohiwerei (2008) investigated the causes of conflict in banking industry in Edo State of Nigeria. A total of 6 commercial banks and two community banks in Edo State of Nigeria were used in collection of data. The study found that most new generation banks belong to two different unions. The junior workers belong to National Union of Banks, Insurance and Financial Institutions (NUBIFIE) and the senior belong to Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFIE) while the banks employers belong to Nigeria Employers’ Association of Banks, Insurance and Allied Institutions (NEABIA).The study found that lot of factors are responsible for the causes of conflict in the banking industry in Edo State of Nigeria. Most managers lack knowledge of conflict management, disciplinary procedure, and retrenchment of staff by management, additional qualification, recruitment of new staff, and agitation for increase in wages and salaries, breach of contract of employment, Non-implementation of negotiated collective agreement.