BH6023: Management and OB, Case study 3: International Bank of Malaysia (1 st

draft)
By: Sabki, Harjit, Raja Khairul and Firdaus. 3 Sept 2010
Case Study 3: The International Bank of Malaysia
1.0

Summary

Mr. Ian Dankworth, General Manager of the Kuala Lumpur Branch Office of The
International Bank of Malaysia was facing a serious personnel problems in his office.
Two of his department heads, Mr. Wong Chin Poh (the Credit Manager), who is of
Chinese origins, and Mr. Zainuddin bin Abdul Wahab (Administration and Accounting
Manager), who is a Malay, were making efforts to discredit each other thus causing
disruptions to morale and performance among the employees. Mr. Ian was aware
that whatever action that he take would be scrutinized by the office employees and
the Malaysian government.
The Kuala Lumpur Regional Office employed 58 employees and Mr. Ian was
responsible for the overall performance of the bank in Malaysia. Mr. Ian, an
Australian, held the top post as General Manager. His immediate subordinates were
Mr. John White (the Senior Representative) and Mr. Cheong Shul Lee (the Regional
Manager), a Eurasian. Reporting directly to Mr. Cheong were 6 managers, including
Mr. Wong and Mr. Zainuddin. Except for Mr. Zainuddin, all of the managers were of
Chinese origin.
Mr. Zainuddin, whose father was a prominent lawyer, had worked for
International for 13 years, which included 2 years in the home office in the US. He
appeared to be a devout Muslim. Ian characterized Mr. Zainuddin as a very nice
person, with a good sense of humor, likable, but useless, and rather idle and weak
in technical areas. Mr. Ian was also was ruefully aware that Zainuddins presence
was a political necessity. His staff like him, but saw him as stupid and a bit of a
joker. However, it was also stated in the article (page 362, paragraph 2) that Mr.
Zainuddin was quite capable of handling certain procedures and had gradually
gained some measure of control over all but the largest domestic cases.
The Malaysian-born Mr. Wong, whose ancestors were from China, came from
a rich Chinese business family. He was a Buddhist, a university graduate, and had
spent a 9-month training stint in the US shortly after joining International. Both were
married and lived in the company homes in KL. Mr. Ian described Mr. Wong as
immature, with a childish sense of humor, and more given to pranks. He also
noticed that Mr. Wong, as an executive, was not getting due respect from his staff
because of his immaturity, even though he was a hard worker and technically
competent. Nonetheless, Mr. Ian acknowledged Wongs contributions and his
potential to progress.
Based on the racial riots after Malaysia gained independence from the British,
the governments policy on the percentage or distribution of posts in all levels of an
organization must follow the racial composition of the country, whereby 30-40% are
reserved for Malays, 20-30% for the Chinese and the balance for others. Mr. Ian was
in a dilemma because it was difficult to make a choice that could please everyone,
and whatever decisions he made had to be put in the context of increasingly antiexpatriate climate. He could not simply employ many Malays staff into the office
just to please the government of the day as he may not need them. Mr. Cheong
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BH6023: Management and OB, Case study 3: International Bank of Malaysia (1 st

draft)
By: Sabki, Harjit, Raja Khairul and Firdaus. 3 Sept 2010
would be replacing Mr. John, who would be transferred soon. The questions are, if all
went according to plan, who should be promoted to the vacant position left by Mr.
Cheong; Mr. Zainuddin, or Mr. Wong? Should International merge with other local
banking network? Should it be sold? Should they relocate to some other country?
Mr. Ian knew very well that whatever decision he makes carry its own risks.
2.0
List of problems
2.1

There existed a personality clash between Mr. Zainuddin and Mr.

Wong. Mr. Zainuddin took every opportunity to criticize Mr. Wong, who
was also a committee member that operated the companys sports
club. Once, the committee decided to sell two of the carom boards it
owned and circulated a memo through the office requesting those
interested to buy a board to submit bids in writing by the following
Saturday at 12 noon. Zainuddin, who apparently just knew about this,
stopped by the club secretarys desk at 9 a.m. on that Saturday and
told the secretary that he wanted to make a bid but had to leave for an
appointment. At 12 noon that Saturday, the secretary told the
committee about Mr. Zainuddins comment, but they opened the bids
anyway and sold the boards. The following Monday, Mr. Zainuddin gave
the secretary his bid, which was higher than the other bids submitted
on Saturday. He was furious when told that the boards had been sold,
and in anger and full view of the office staff, accused that Mr. Wong
had conspired to deny him a fair chance. This is arrogance, and it is
also disruptive.

2.2

Sometimes a competitive situation was created when the Credit

Department (headed by Mr. Wong) required precise costing information
to assist in pricing an attractive loan opportunity, but the
Administration and Accounting Department (headed by Mr. Zainuddin)
hindered a rapid turnaround by blaming branch tardiness as the cause.

2.3

Personal loan applications channeled to the regional office via the

Credit Department may be endorsed by them, but the Administration
Department may deliberately block or delay them because of
conflicting opinions regarding the anticipated cost/benefit trade-offs.
Both departments uncompromising manner were hindering the
business development efforts of the Branch Managers.

2.4

Mr. Zainuddin would turn up late for work, disappear for hours without
an explanation or reason, and take extended lunch hours despite
repeated instructions, reminders and threats from management to
adhere to standard office procedures. However, compared to other
office staff who were being disciplined for similar matters, Mr.
Zainuddin could get away with it. This is definitely demoralizing to
other staff.

2.5

A letter from the Labour Ministry to Mr. Ian stated the racial
composition of the staff at each salary level did not reflect that of the
country, which was 30-40% for Malays, 20-30% for Chinese and the
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BH6023: Management and OB, Case study 3: International Bank of Malaysia (1 st

draft)
By: Sabki, Harjit, Raja Khairul and Firdaus. 3 Sept 2010
balance for others. Thus, the company was asked to give a written
assurance that they undertake to fulfill the governments aims. This
problem was further aggravated since Mr. Cheong was slated to
replace Mr. John White, who would be transferred to another post. Noncompliance to this government policy might result in Internationals
charter in Malaysia revoked.

3.0

2.6

Mr. Ian, aged 40 (quite young), had spent 5 years in Malaysia before
becoming General Manager. He had previously served in the Senior
Representative post. In the office he appeared totally in command,
managing people and problems with calm and assurance. However, he
had never received any specific training for his present post,
which he had occupied for 3 years, other than the 4-week
management development course in Hong Kong which he was
completing. He had learnt to speak Malaysian.

2.7

The commonly held stereotype that the Chinese are shrewd

(sometimes dishonest) businessmen who would work longer hours if
necessary if it was rewarding to them. In contrast, the urban Malays
were seen as living hand-to-mouth. Malay farmers were seen as more
hardworking, but more difficult to change and having a short-range
perspective. They are happy just being marginal. This stigma is selffulfilling.

2.8

The Chinese progress steadily to higher levels because of their

ambition and willingness to work but because of government action,
they were restrained from the very top positions which political
pressure reserved for Malays. This could be perceived as a form of
favouritism, or racism and this had caused a lot of dissatisfaction
among other non-Malay races in the country, not only among the
Chinese Malaysians.

2.9

Mr. Ian was concerned about the availability of competent Malays, and
because of the shortage of teachers, this would be prolonged for some
time to come. Meanwhile, as the demand for competent Malays
increased, so would their salary. High salaried non-competent workers
may be worse.

2.10

Fifty percent of the companys overheads were taken up by salaries,

and any drastic change in the organization chart (especially by
employing more Malays) would have significant financial implications.

Problem statement
The personality clash between Wong and Zainuddin, both of whom
were managers of different but interdependent departments at the
International Bank of Malaysia Branch Office were causing serious
damage to morale and efficiency of the staff.
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BH6023: Management and OB, Case study 3: International Bank of Malaysia (1 st

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By: Sabki, Harjit, Raja Khairul and Firdaus. 3 Sept 2010

4.0

Strategies thought by Mr. Ian

4.1

He could duplicate positions, pairing a figurehead Malay with a Chinese

who would perform most of the tasks.

4.2

He could simply stall, and continue with his present staffing

arrangements.

4.3

He could attempt to comply with the government requirement as

quickly and fully as possible.

4.4

He might plan a judicious mix of these approaches.

Whatever decision Mr. Ian takes will have risks. But he has to take them and be
responsible for them, as each one has its own advantages and disadvantages.
5.0

Alternative strategies to overcome the problems

5.1

Short term strategies

Mr. Ian must try to invite Wong and Zainuddin into his office (or some
other less official venue, such as a restaurant) to discuss their dislike
for each other and convince them that their enmity would only incur
losses to the company. It may not be easy, be Mr Ian should consider
this option seriously. It may turn out to be positive, or it may become
worse. But Mr. Ian could try to use his calmness and authority to
reconciliate the two managers. If he is not sure of how to approach
these two managers, he may opt to refer both of them to a counselor
who might be able to give them professional counseling regarding their
disruptive behavior.
Another option is to transfer Mr. Wong to the home office in the
US for a reasonable period of time (maybe 5 years), and appoint a new
but qualified Malay manager to his vacant position. Qualified here not
only means academically, but a Malay also properly trained in
communication skills that may help to bridge gaps between the two
races in the office. Racism was not the main issue here, but rather on
personality. Mr. Zainuddin may be able to work better with another
Malay manager. But this may not resolve all the problems, as this does
not necessarily mean that he himself will improve on his discipline. The
absence Mr. Wong in the KL office may help alleviate the disruptions
and demoralizing behavior of the two. Appointment of the qualified
Malay may also help pacify the Malay politicians, thus ensuring that
Internationals charter may see another day for some time.

BH6023: Management and OB, Case study 3: International Bank of Malaysia (1 st

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By: Sabki, Harjit, Raja Khairul and Firdaus. 3 Sept 2010
If Wong goes, Zainuddin may even be elevated to the post left
vacant by Mr, John. But he definitely will need further training,
especially in leadership courses where attitude and teamwork is
emphasized. His vacant managerial post may then be filled up with
another qualified Malay manager. This may seem to be parochial, but
Mr. Ian should give it some consideration as the governments policy
must also be adhered to somehow. This may be perceived as
compliance and maybe could turn out to be beneficial in the long term
relationship with the government, especially in terms of business
opportunities.
It may also be effective for both Wong and zainuddin to undergo
counseling sessions to improve their attitude. If only Zainuddin
undergo counseling, Wong may think that he is not part of the
problem.
Despite the government policy on race percentage in
organizations, Mr. Ian should immediately visit the relevant officer at
the Ministry of Labour and try to reason out with him, in order make
him understand the real perspective at International. Among the
reasons may be as follows: a) International needs qualified personnel
and at this time, it is quite difficult to get them at the right pay as the
banks overheads are also stretched. b) The company cannot simply
retrench the Chinese employees and replace them with Malays in a
short time. More so if the Malays are not up to the job as this may be
detrimental to the companys performance. Less profit for the
company means less income tax to be collected for the government.

5.2

Long term strategies

Mr. Ian should also consider merging International with a local banking
network through which its services could be maintained within the
local domestic market. This, of course needs approval from the home
office. By this merger, Mr. Ian can leave the problems squarely on the
new management team to resolve.
To sell the company would be a last resort and would also need
approval from the home office. This is not a wise choice as it was still
making profits in Malaysia.
International, being an international entity, could easily relocate
to some other country, such as Singapore, where there is less pressure
from the government to fulfill racial quotas. Over there, the new
branch can recruit new people and train them properly. This may incur
costs, but that is what business is all about. International can start all
over again. This is an attractive option.

BH6023: Management and OB, Case study 3: International Bank of Malaysia (1 st

draft)
By: Sabki, Harjit, Raja Khairul and Firdaus. 3 Sept 2010
6.0

The best strategy

The best strategy is for Mr. Ian to first make every effort possible (as
suggested in 5.1, paragraph 1, above) to reconcile the personality clash
between Wong and Zainuddin as this is the most urgent problem. If this
can be achieved, some level of harmony may be achieved in the office.
There will be less disruptions and less inefficiencies. The company image
will also be repaired. Secondly, both Wong and Zainuddin need to attend
counseling until they are able to overcome their animosity with each
other. After this is settled properly, Mr. Ian can then move on to tackle the
other problems one by one.
7.0

Conclusion

This is a classic example of a difficult situation where a wrong decision can define
the survival of the organization. There are times when government policies can be
seen as detrimental to the growth of business and suppress talent and prosperity.