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Introduction to Change Management

Question:

Discuss about the Case Study Of The Australian And New Zealand Banking Group Limited.

Change is something that no organization can escape. If an organization fails to change, there are chances that the approach it uses to play in the market will become old and outdated, thus losing the competitive advantage. This is because for any organization to succeed or gain profit there must be some changes made, for example, leadership changes in case the current leader is not performing well or resigns. There are also changes where the employees are promoted or demoted, or resignation (Luca, 2015, pp. 36-42). Various sectors also change because of new ideas in the market. Change helps businesses to be flexible and cope up with the new trends in business. 

Change leads to disruption of daily activities during its implementation. This necessitates the aspect of managing change. There is need to plan for change implementation and management for the successful transition. Many factors necessitate change, usually referred to us change drivers such IT-enabled change among others. Successful change implementation demands for full support from all the company's stakeholders. Therefore, people in organizations should be ready to embrace change so that they work for positive results (Madden, . and Duchon, Madden, and Plowman, 2012, pp. 689-708). The paper is going to present a case study which will bring out how different theories of  change management can be applied in various scenarios.

Kurt Lewin is one of the oldest change management theories or models. Lewin who was a psychologist at the time pioneered social psychology and the importance of change management at the time when he came up with the model (Martins, 2011). The model is still used up to date because of its simplicity. Kurt Lewin’s model consists of three steps namely unfreeze, change and refreeze phases.

In this phase, an organization is forced to dig deep into its problems and find out why the change should be carried out. This is mostly due to a decrease in productivity, low sales members and an increase in customer complaints. The organization remains with no option but to find a way of bringing the business to normal (Bartunek and Balogun, 2011, pp. 1–52). Therefore this involves bringing in change to bring back the normality of an organization.

In the case of the Australian and New Zealand Banking Group Limited (ANZ), they had to put in a new CEO in the late 1990's because of bad debts, poor organization, low employee morale and customer dissatisfaction. The bank had to bring a new CEO following several years of poor performance which could have possibly led to the bank collapsing.

Theories of Change Management

In this phase the  management has already set the goals and therefore implements the changes needed and then give time to employees to accept the change (Bartunek and Balogun, 2011, pp. 1–52). During this time, the management can still come up with a more efficient way of dealing with the problem. In ANZ, they brought in a new CEO by the name John McFarlane. The bank chose Mr. McFarlane because he portrayed himself as someone well-rounded and can work well to save the company as he had worked well with other companies (Gehman, Trevino, and Garud, 2013, pp. 84–112).

The bank was not trusted by the community, customers, and employees, due to closing some of its branches and fee increase, so the CEO brought in his changes to try and save the bank. The CEO had to freeze the bank closure to start gaining trust. The bank lacked women in the senior positions, and the CEO realized that women should also be in those positions. He came up with new ways of transforming the bank to human face so that it can be customer friendly and also to the workers.

In this stage, one has to finalize changes and make them policies. When people stay for too long in the change phase, they may start coming up with alternatives so the best way is to put the changes to policies so that in the case of a problem the organization can easily re-evaluate (Avenier, 2010). The organization had to transform its image into a bank with a human face. The CEO and his team came up with policies that can assist it to perform, grow and break out (Vogel, 2012). This was to give a different experience to the stakeholders and employees and also to change the perception people had on the bank's culture (Thomas, Sargent and Hardy, 2011, pp. 22–41).

The organization's employees were not performing their best so McFarlane, came up with performance management that consisted performance planning, performance coaching, and performance assessment of helping the bank to achieve outperformance. After McFarlane's retirement, another CEO Michael Smith was brought in as his successor and also implemented his policies which were customer focus, marketing and sales, technology, and performance to help him deal with the challenges.

Kotter's Model came over to challenge Lewin’s model by John P. Kotter, a Harvard professor and a change management theorist. Kotter came up with eight steps as strategies to change management (Coghlan, 2011, pp. 53–87). His model dwells on the resistance that employees can portray due to change and how organization can deal with those issues. It is the easiest model to understand because even small organizations can adapt them with ease (Lichtenstein, 2014).

Applying Lewin's Model to ANZ Bank

In Kotter's eight-step model, one has to establish a sense of urgency, come up with a team that wants change, come up with visions and strategies for change, communicate the need for change to other people, empower employees to act themselves, come up with short-term goals, be persistent, and make the changes permanent by using Lewin's phase of refreezing (Madden, Duchon, Madden and Plowman, 2012, pp. 689-708). The management is supposed to have the right people during this transition. The employees should see the need to embrace change faster, and also short-term goals help THE employees to have a sense of accomplishment (Sonenshein, 2010, pp. 477–512).

The ANZ bank was collapsing, and therefore, there was an urgency of finding a solution to the problem. The bank had lots of debts; employees had lost morale and customers were not being satisfied. At this time there was also ill-will and distrust towards Australian's major banks.When the new CEO was brought in Mr. McFarlane, he came up with a team and goals that were supposed to be accomplished. One of his goals was to put women in senior ranks and also lower the bank's risk profile by ensuring customers, and employee satisfaction and trust are back.

McFarlane had a leadership team that instigated a strategy called perform meaning (deliver financial performance and shareholder value), grow meaning (strengthen revenue, leadership, and brand) and breakout meaning (built foundations for sustainable and long-term success). They also came up with performance management plan that was also implemented to regularly assess the performance of the bank. Michael Smith, McFarlane's successor also came at a time when the banks two senior staffs resigned and the bank was under investigation. Smith took a senior management team came up with strategies to increase capital, strengthen the balance sheet and also improve liquidity. He also came up with core capabilities to ensure a bank becomes a super-regional bank in five years.

This model describes seven stages that an organization should progress with when implementing a set of changes. It is called a 7-S model because every facet begins with an S. the model is ambiguous and sometimes confusing but it is a sound basis for something that is more structured (Albert, 2013). The model is open-ended, and therefore most organizations do not like it (Langley, Smallman, and Tsoukas, 2013, pp. 1–13).

Structure is how the organizations structure can affect change implementation, systems is what is existing in the body that need to be updated or done away with, skills are the strengths an organization has that can be used to make the changes more efficient for example an employee or section, style this is the culture of an organization and how stakeholders perceive it, staff the workers in an organization have different skills that can help in implementing change, strategy is what you come up with so that the organization may benefit from the change even in future and finally shared values mean that goals of an organization should be clear to every employee and they should try to achieve them (Bingham and Kahl, 2013, pp 14-34).

Kotter's Model in Practice

When Mr. McFarlane joined ANZ, the bank was at risk of losing all its customers because of poor performance. He found that the customers had ill-will towards the bank because of branch closures and fee increases. He also noticed that leadership at the bank was not balanced, and performance of employees was not assessed therefore this way he updated the existing systems. The bank's culture revealed that the bank had positive values such as goal and resulted in orientation and on the other hand employees felt too much bureaucracy and hierarchy.

McFarlane ensured that every two years top 100 people are assessed externally on talent, and the bank uses this to come up with new plans and actions to provide new opportunities for the top talent. Line managers and HR managers are trained to lead the assessment process, this way the bank had shared values of learning and development at all levels. These strategies and that of performance result in employees and customer satisfaction. Michael Smith, on the other hand, got in collaboration with the senior managers with other employees had shared goals of ensuring the ANZ has increased capital and improving liquidity. They also had a specific goal of improving customer focus, creating clear accountability and stronger management. This came up due to eroded confidence in the banks, and money borrowed by banks to lend to customers being expensive.

This model is not like other models that emphasize on immediate and systematic change instead it goes for small, incremental changes as time goes by. This model stands for orderly and moderate changes that give employees a chance for adjustment before facing another change (Grant and Marshak, 2011). ADKAR stands means, Awareness of the need for change, Desire to carry out change, Knowledge of the vision that is why you want to change, Ability to bring in new skills and behaviors and implement them, and Reinforcement that can make the change last for a longer period (Stachowiak, 2010). The model is simple and practical and therefore the change will be normal to employees as there is no drastic change (Rodell and Colquitt, 2009, pp. 989-1002).

The ANZ Bank had awareness for the need of change for a new CEO. For any organization that has downfallen, it needs new management or change of other people to bring in new ideas. There had to be a change in the management for the bank to get back on the right track. McFarlane identified the need of the bank to move to a new state and enforced the changes by using the leadership team and other managers to help him. This was a good move in the process of change transition.

The 7-S Model

To get employers to work for the bank without complaints, the CEO and the leadership team came up with ways of appreciating the staff. This was investing in the leadership of talented staff members. They used this to find potential leaders in the junior management and they were appreciated. The whole staff is involved in the program in which 20% of the staff are at the top, 70% are in the middle are 10% at the bottom. To also motivate employees, performance assessment review was provided every year and rewards given according to the performance outcome.

Michael Smith facing challenges of customers having less confidence in the bank, money being lent to customers being expensive and hard to source, he had to look out for ways he could bring change and resolve this problem. He implemented new ideas that include; improving customers focus, creating clear accountability and stronger management of the bank. This could help in strengthening the balance sheet and even increase in capital. Therefore, Michael Smith took the right move in the process of implementing change in the organization.

The retired CEO should have trained his successor so that it would have been easy for them to continue at the point he had left. The CEO had picked up the bank at the point where the bank was a big mess, and therefore he could have left the skills to someone so that in the case of a crisis like the one they had of poor performance, it can be solved without a problem.

Michael Smith should adopt Kotter's model in which one of the stages involves implementing short-term goals. The employees should at least have a feeling of accomplishment before moving on to another thing. Mr. McFarlane did not practice this because he used to come up with different ideas and try to implement the at the same time wand these does not make employees that feeling of accomplishment. If someone feels like they have accomplished one thing, it gives them morale to even do another thing more effectively.

If anyone wishes to use ADKAR model, they should combine it with another model because it does not have a long-term strategic view. Changes cannot always be small and incremental because there is those times that an organization needs to make a drastic change for it to attain what it wishes. According to ADKAR model, when McFarlane came to the bank, he should have gone slowly with his implementations so that employees can adjust slowly and this could not have worked well with the bank.

Conclusion

Also, it is important to consider the stakeholders in the process of implementing change. Support of the change by all parties in the organization increases the chances of success. If the change process encounters resistance from the stakeholders, there is the likelihood of failure in the change process. Regular communication with the all the stakeholders is important in helping the organization manage change successfully. Communication helps people to feel that they are part of the change. Therefore, considering people is inevitable for the successful change transition.

Conclusion

In conclusion, before coming up with a change in an organization, one should look up for different change management theories so that they can know the best way of implementing change according to their organization. It is always perceived that the best time to bring change is when there is the success but sometimes the best time is when it is in crisis and bring in a good change can save people. When there is the success, people can tend to be resistant because there is nothing to worry about. Hence, when bringing in change, the purpose should be clear to everyone in an organization.

Also, it is clear that many different change drivers trigger change. In whichever case, the organization needs a clear change plan. The program helps to ensure that the change brings about all that is required in the organization and also help control all the possible sources of drawbacks. Therefore, the plan is critical for the success of change implementation process.

References

Albert, S. (2013). When: The Art of Perfect Timing. San Francisco, John Wiley & Sons

Avenier, M. (2010). Shaping a constructivist view of the organizational design science.

Bartunek, J and Balogun, D. (2011). Considering planned change anew: stretching large group interventions strategically, emotionally, and meaningfully, pp. 1–52

Bingham, C. and Kahl, S.  (2013). The process of schema emergence: assimilation, deconstruction, the unitization and the plurality of analogies, pp 14-34

Coghlan, D. (2011). Action research: exploring the perspectives of a philosophy of practical knowledge, pp. 53–87

Gehman,  J., Trevino, L. and Garud, R. (2013). Values work: a process study of the emergence and performance of organizational values practices, pp. 84–112

Grant, D. and Marshak, R. (2011). Toward a discourse-centered understanding of organizational change.

Langley, A, Smallman, C and Tsoukas, H. (2013). Process studies of change in organization and management: unveiling temporality, activity, and flow, pp. 1–13

Lichtenstein, B. (2014). Generative Emergence: A New Discipline of the Organizational, Entrepreneurial, and Social Innovation. New York: Oxford Univ. Press

Luca, B. (2015). A Review of Innovation and the Change Management: Stage Model and Power Influences. Universal Journal of Management, pp. 36-42.

Madden, L., Duchon, D., Madden, T. and Plowman, D. (2012). Emergent organizational capacity for compassion, pp. 689–708

Martins, L. (2011). Organizational change and development. In APA Handbook of Industrial and Organizational Psychology, Vol. 3, ed. S Zedeck, pp. 691–728. Washington, DC: Am. Psychol. Assoc.

Oreg, S. and Michel, A. (2013). The Psychology of the Organizational Change: Viewing Change from the Employee's Perspective. Cambridge, UK: Cambridge Univ. Press

Rodell, J. and Colquitt, J. (2009). Looking ahead in times of the uncertainty: the role of the anticipatory justice in an organizational change context, pp. 989–1002

Sonenshein, S. (2010). We're changing—Or are we? Untangling the role of progressive, regressive, and the stability narratives during strategic change implementation, pp. 477–512

Stachowiak, S. (2010). Pathways for Change: 6 Theories about How Policy Change Happens. Organisational Research Services, Seattle.

Thomas, R., Sargent, L. and Hardy, C. (2011). Managing organizational change: negotiating meaning and the power-resistance relations. Organ. Sci. pp. 22–41

Van, N. and Sminia, H. (2010). Organization development: What’s actually happening? Change Management, pp. 4

Vogel, I. (2012). Review of the Use of the  ‘Theory of Change' in International Development. UK Department of International Development. DFID, London.

Woodman, R. (2008). Discourse, metaphor and the organizational change: the wine is new but the bottle is old, pp. 33–37

Zietsma, C. and  Lawrence, T. (2010). Institutional work in the transformation of the organizational field: the interplay of boundary work and practice work. Adm. Sci. pp. 189–221

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