The Prospects of Organisational Development and Change - Essay Example

Running Head: Organizational Development and Change Organizational Development and Change Customer’s name: Institution: Customer’s Course Tutor’s Name 7th September, 2014 Section 1: Summary of case context This project sets out to offer a plan for organizational development and change in a specific organizational context. This will be done from the perspective of the change agent or organization consultant. It will focus on the integrative case study that is; the case study on Sydbank. Sydbank was initially a building society which operated under the brand name Sydsociety. It is based in New South Wales and was established in the year 1959. During that period, the financial environment was greatly regulated, and the building societies were only allowed to offer limited financial services. The society’s main capital was mainly derived from their depositors or from their member’s savings. They later used the savings and offered small personal loans and housing loans (Allan & Dawson 1995). During that time, building societies such as Sydsociety were not allowed to provide credit or commercial facilities and it is during this time that it experienced modest growth in the year1960s as well as in the early 1970s. By the year 1974, though it had a very small number of staffs, it had been able to acquire a sound reputation mostly in the provision of housing loans most especially for first time buyers. In later parts of 1970 and early 1980, Sydsociety expanded its market shares as well as its branch networks in New South Wales. At the same time, their limited products range and services were marketed in an aggressive manner. Based on this, their sales grew tremendously and also its size. Their total assets stood at $1, billion and the organization also held a good reputation (Allan & Dawson 1995). Despite all these positive aspects, the rapid growth led to a very high level of operating costs, and this was derived from a comparison from similar organizations which were based somewhere else. This negative aspect as over time remained a continuing concern for the company. The federal government deregulated the banking industry in the mid 1980s, making it easier for building societies such as Sydsociety to change into banks. The society changed into a bank on July 1988. Based on the fact that it was operating in an environment that was competitive, it broadened its service and product offering. At the same time, they made good use their already existing network and extended their services of commercial lending to their business clients and also offered credit facilities to individuals (Allan & Dawson, 1995). In addition, they acquired a finance company in 1989. By the year 1990, the bank had staff members who exceeded 1200, and they also had an assets base of about $2 billon. Section 2: The Development/ Change Plan and Process Problem identification The major problem facing Sydbank is that, it has a high level of operating costs, and this was derived from a comparison from similar organizations which were based somewhere else. This negative aspect has over time remained a continuing concern for the company. This seems to be a major challenge due to the wide geographical presence in that, the bank that has a wide number of branches in New South Wales. The core aim of the bank is having branches that are geographically dispersed as to attract and take care of different customers. This has not worked as expected since, by having many branches, the bank has heightened their operational costs (Allan & Dawson, 1995). By having many branches the number of employees increased with time. Another major cause of the heightened overhead costs is based on the fact that, since it became a bank, it has been developing new products and services. Companies’ usually spend a considerable amount of money in the development of new services and products for them, to be at par with their competitors. Though this seems to be an advantage to the business, some businesses may incur added costs. This can be attributed to the fact that, they may require new machines and personnel to deal with the new services and products (Armenakis & Harris, 2002). The new services and products may not be in a position to cater for their own costing terms of employees, office space and marketing, thus causing an increase in overall costs. Approaching the problem as a change agent Over the years, companies have been implementing restructuring programs aimed at reducing the overhead costs and in doing so; they have applied aspects such as ERP, business process re-engineering, shared services and strategic outsourcing. These traditional methods have been found to be effective in the improvement of the bottom line and also in the enhancement of shareholders’ value. Over time they have run their course (Armenakis & Harris, 2002). As a change agent, I strongly argue that companies cannot keep on squeezing these functional areas without compromising on the value that is associated with these services. Thus, companies need to look for other ways that can enhance additional as well as significant savings in their overheads functions. This will ultimately mean overall lowered overhead costs. Planned change process Companies need to step back and adopt broader and newer perspective to as to deal with this old age problem. The newer perspectives need to incorporate both the supply side cost restructuring and also the demand side optimization strategies. By approaching cost reduction from these two perspectives, companies such as Sydbank will attain major benefits and savings. This notion is related to basic microeconomics. By aligning the supply side with the demand side, companies will be able to achieve value based equilibrium. This kind of alignment paves ways for next generation overhead cost reduction strategies. In regard to this problem, I would propose that Sydbank uses Booz Allen’s approach. This approach attacks overhead costs from both sides. That is the supply side as well as the demand side and this implies that the bank will benefit a lot (Bolman & Deal, 2008). By managing demand, banks such as Sydbank needs to look at it carefully and systematically and they also need to carry put business specific assessment when it come to services needs at each level of performance and why. By doing so, the bank will be able to know the criticality of the services and functions and thus the determination of excellence verses adequacy. Executives in the bank need to understand and at the same time question the key business drivers on a departmental basis. The demand and supply cost reduction strategies are not commonly exclusive. In reality, Sydbank can achieve maximum efficiencies by exploiting both of them, and discovering the strategic equilibrium where the supply services and demand services can be aligned. This needs to be done by disaggregating overhead costs from a demand perspective as well as from the supply side perspective (Bolman & Deal, 2008). The supply side disaggregation will mean breaking the services into component activities and then later assembling them in terms of their inherent nature, frequency of usage as well as the channel used of accessing the service. The demand side disaggregation will focus more on the ranking down of the appetites from the wide range of services among the customers. The categories will include aspects such as “must have,” “want to have,” “smart to have” as well as those that are “nice to have”. The disaggregation will offer a clear view of the service breadth as well as levels that are currently being consumed in the bank. By this segmenting, the bank will have an analytical and conceptual view of its overhead cost structure. In more precise terms, Sydbank will be able to identify the demand and supply levers that would be effective as well as non-disruptive when it comes to cost reduction. For example the bank can take outsourcing to the next level and this can be done by slashing off some of their utility services and at the same time relocating them offshore. They can also hand over some entire functions to third party providers. Additionally, they can also transfer some of the core strategic services such as marketing and IT applications developments (Bolman & Deal, 2008). In relation to the demand side, the bank needs to vet capital investment projects carefully prior to approving the expenditure. The bank can also apply some of the customer segmentation techniques in segmenting and managing internal customer demands for some of the overhead services. Handling of communication and readiness to the change Most people do not acknowledge the important role played by communication in change. The main usage of communication in the change process is to create a great level of clarity. Thus, management needs to ensure that all people understand what is being achieved. Well planned communication usually plays a role in that, it helps people and makes them have a positive thinking about change and thus lessen the impacts associated with resistance. The reverse of this statement is also true in that; poorly planned communication usually leads to heightened resistance (Clampitt, DeKoch & Cashman, 2000). Employees need to be prepared for the change so as to avoid resistance to planned change in an organization. When implementing the planned change, management ought to ensure that they communicate in a consistent manner and frequently. They also need to communicate through multiple channels and mostly two way communication should be used. A great number of people value conversations and dialogue. Though this may take a considerable amount of time and is usually effective since it will encourage dialogue. Additionally, change agents and the management team need to ensure that they communicate anything new about the change when they receive the information. This will ensure that the employees are prepared in advance for the planned change. Also, in the communication and readiness of change, other people in the organization need to be given ample amount of time to ask any queries, request clarification where necessary and offer input (Clampitt, DeKoch & Cashman, 2000). Communication of the mission, vision and objective of the change ought to be outlined clearly. This will go a long way in helping people to understand how the planned changes will affect them personally as well as the area in which they work in. Also, in readiness of the change, the change agent need to find time and communicate to the employees the reasons behind the planned change and this should be done in a manner that people understand the purpose, context as well as the needs. In this regard, they should create memorable, conceptual and theoretical framework upon which they should underpin the planned change so as to reduce the overhead cost of the bank (Daly, Teague & Kitchen, 2003). Evaluation of change efforts Change efforts needs to be evaluated to determine if the change was successful and if the required results has been achieved. The best kind of evaluation to be done in our case is goal based evaluation. Most programs are usually formed with the aim of accomplishing specific goals. This kind of evaluations typically assesses the degree to which the program and the process used have met the goals. The goals set should meet the SMART objectives. Based on these, the timeline needs to be set so as to analyze the goals. Also, personnel need to be assessed to ensure that they have adequate resources aimed at achieving the goals. In the identification of the outputs, inputs and outcomes, it would work on well if a logical model was adapted to analyze what goes in and what comes out of the program (Burnes, 2009). By doing so, the change team will be able to come up with aspects that need to be changed and also which ones can be added to ensure the achievement of the goal. In this case is the ultimate reduction of overhead costs the Sydbank bank. A lesson that one could learn from the anticipated outcome is that, no matter the magnitude of a specific challenge facing an organization, there will always be a solution to it (Fullan, 2005). Thus, the management team needs to work collaboratively with all partners and their employees to come up with solutions to the challenges. Thus, they will ultimately save a lot and at the same time have a wide range of benefits. References Allan, C. & Dawson, P. (1995) 'The managerial politics of organizational change.' In Organizational change strategies: case studies of human resource and industrial relations issues / edited by Margaret Patrickson, Val Bamber, Greg J. Bamber. Melbourne: Longman Australia, 1995. Chapter 22, pp. 253-261 Armenakis, A.A. & Harris, S.G. (2002). Crafting a change management to create transformational readiness. Journal of Organizational Change Management, 15(2), 169-83. Bolman, L., & Deal, T. (2008). Reframing Organizations. San Francisco, CA: Jossey-Bass. Burnes, B. (2009). Managing Change (5th Ed.). Harlow: Prentice Hall. Clampitt, P.G., DeKoch, R.J. & Cashman, T. (2000). A strategy for communicating about uncertainty. Academy of Management Executive, 14 (4), 41-57. Daly, F., Teague, P. & Kitchen, P. (2003). Exploring the role of internal communication during organizational change. Corporate Communications: An International Journal, 8(3), 153-62. Fullan, M. (2005). Leading in a culture of change. San Francisco, CA: Jossey-Bass. Read More