The Effects of Organisational Change on Productivity in Large Organisations - Dissertation Example

? The effects of organisational change and the feedback of the change on productivity in large organisations (financial industry) Contents Organizational Background 3 Research Questions and Objectives 4 Research Questions 4 Research Objectives 5 Literature Review 5 Methodology 10 Reflections 12 Time Scale and Resources 15 References 16 Organizational Background Large examples of organisational change in business organisations involve large scale decentralisation which helps the employees in all circles and in all departments to gain authority in order to perform effectively. The culture of decentralisation involves creation of flat organisation structures which helps the employees in performing a number of tasks in a simultaneous manner. Specific organisational changes that can be brought about in an organisation involve the process of incorporating newer technological processes and innovations like installation of advanced machineries or changes in financial and human resource policies. This large amount of decentralisation rendered in the organisation helps in generating a skilled work atmosphere in the concern which thereby helps in enhancing the productivity of the labour forces. Large amount of technological innovation rendered in the workplace systems through the installation of computer technology works to a great extent in altering the organisational culture to become more sophisticated and much faster in meeting organisational objectives. However it is argued in this regard that mere incorporation of newer processes and technologies in the organisational sphere does not solve the game unless a proper set of practices are regulated for its steady implementation. (Hakanson, 2-5). In regards to the above discussion focus can be rendered on the effects of organisational change like incorporation of information technology resources on the productivity parameter of financial organisations like insurance industries. It is found that the extensive use of information technology in the insurance industry has helped in the effective processing of financial information which helps in the optimal management of insurance claims made by different people. Coupled with the introduction of information technology the organisational systems of the insurance industries also were made to undergo some basic organisational changes like rendering of large scale decentralisation which helped in enhancing productivity. It was observed that the enhanced use of information technology in the insurance industries helped the insurance companies to develop larger network channels. This enhancement in the channel network of the insurance industries helped in augmenting the growth of marketing activities and also eased then premium collection process. Furthermore the increased use of information technology rendered in the insurance industries also helped in reducing the cost of maintenance of distribution and marketing channels. Reduction in the operational cost helped the insurance industries to make large number of investments in incorporating better technological processes and innovation systems thereby enhancing the productivity of the firms. (Matassa, Neirotti, and Paolucci, 1-6). Research Questions and Objectives Research Questions The paper divulges to answer the following research questions in regards to the issue of rendering changes in the organizational structure, systems and processes. Firstly it endeavours to highlight on the degree of changes that can be rendered in the basic organisational structure. Secondly it focuses on the processes through which such organisational changes so planned can be rightly implemented in the existing organisational system. Thirdly the paper endeavours to highlight on the effect of such changes brought about in the organisational structure in affecting the productivity parameter of the companies. Fourthly the paper in regards to the above discussion focuses on the case of a specific industry belonging to the financial world. Research Objectives The paper while endeavouring to answer the above research questions also proceeds further in meeting some key objectives which can be enumerated as follows. 1. Understanding the pattern of changes that can be rendered in an organisation. 2. Focusing on the process through which such changes can be effectively implemented in the organisational system. 3. Highlighting the effects that these organisational changes are meant to render on the firm’s productivity and performance parameter. 4. Understanding the effects of such changes on enhancing the productivity parameter in key relevance to the financial industry. Literature Review In terms of organisational change the introduction of information and communication technology in the business hemisphere can be closely studied. To this end, Greenan (2002) states that the introduction of information technology in the business processes have largely helped in the reduction of operational cost. It is widely observed that the cost of the investments rendered for the installation of effective information technology systems becomes considerably low if efficient policies are conceptualised for its right implementations. The implementation of information technology in the organisation gains efficiency if such can be tied to the process of decentralisation in the workforce. Thus it can be observed that the extensive use of information technology helps to a great extent in changing the organisational structure of the organisations. Furthermore enhanced sophistication rendered in the organisational structure through the incorporation of information technology also helps in enhancing the productivity parameter of the workforce through increased focus on training activities. In a similar manner, Greenan (2002) also states that cultivating sophistication in the organisational paradigm through rendering technological innovation creates further demand in recruiting skilled and developed workforce. Recruitment of skilled people helps in enhancing the organisational productivity through enhancing the performances of the employees concerned at all levels. Again the implementation of information technology in the firm’s structure also helps in developing a culture of high amount of flexibility in the work and service standards. The employees can opt for working from a flexible environment through the large scale incorporation of computers in the organisational framework. Such polices help in enhancing the parameter of loyalty of the employees which thereby helps in reducing the attrition levels. Again the growth of training activities in the organisation further works on enhancing the process of interaction between the management and the employees which in turn helps in motivating the employees to work more efficiently. (Greenan, 8). The paradigm of organisational productivity is closely interlinked with the process of organisational change. In this regard, Bertschek and Kaiser (2003) observe that the level of organisational change brings about effects in enhancing the productivity parameter which can be measured along two aspects viz. operational and that in regards to human resources. It is observed that changes brought about in the organisational structure helps in enhancing the concept of teamwork wherein the employees can perform collectively to satisfy the needs of the organisation. Again speaking on the enhancement of the operational sphere it is noted that the organisations need to invest in a huge manner for incorporating large amount of labour and technological resources in the organizational system. However care must be taken by the organizational managers in rightly changing the work structure within the concern for the effective utilisation of such organisational changes. Henceforth the managers tend to decentralise the organizational structures to help in generating authority among the several employee groups to work in a collaborated atmosphere in fulfilling organisational needs. Bertschek and Kaiser (2003) thus state that the organizations tend to measure the return on the investments made in incorporating such technological and human resources through the productivity generated by working on the decentralisation framework. (Bertschek and Kaiser, 31, 32, 37). On the other hand to enhance the productivity potential the different organisational systems are observed to bring about mass changes in the organizational styles and framework. Kangasniemi, and Robinson (2008) state in this respect that organizations tend to render large amount of reforms in its internal structure through the rendering of potential changes in both the technological and human resource paradigm. However while incorporating newer forms of technology the organizational leaders must make adequate space in the organizational structure through the process of decentralization. This decentralization helps in generating confidence in the minds of people at all levels to work in a collective manner in fulfilling organizational goals. In the second case the organizational managers can help enhance the organizational productivity through the recruitment of skilled labour. The labour standards in the workforce can also be further enhanced through the extensive organisation of training programs to help the people adjust themselves to changing needs. This in turn enhances the flexibility parameter of the industries and works to enhance the productivity. However, Kangasniemi, and Robinson (2008) further observe that increased exposure to organizational reforms renders enhanced competition in the organizational framework. The employees who derive enhanced skills through the continuous use of information technology and also through the recruitment of skilled workforce tend to reflect undue biasness. Increased biasness in the organisation owing to large scale incorporation of skilled workforce tends to create a demarcation between them and other unskilled workers. Highly skilled workers happen to gain better opportunity to rise along the organisational ladder than the other workers. (Kangasniemi, and Robinson, 4-7). Keeping in tune to the above discussion the effects of organisational change on the productivity parameters of the firm can be further analysed in respect to the case of the insurance industry. In this regard, Matassa, Neirotti, and Paolucci (n.d.) state that with the enhanced use of information technology in the organisation like that of an insurance industry the performance parameter of the employees can be largely enhanced in regards to the processing of large amounts of data. Further the marketing and distribution channels of the insurance industries can also be largely enhanced through the effective usage of such information technology resources. It is further observed that the enabling of the information technology environment in the insurance industry has helped the insurance organisations to a great extent in lowering the cost of controlling and monitoring such large scale operations. Moreover the large scale of research and development activities encouraged in the field of information technology also helps the formation of special software which is extensively used by firms pertaining to banking and other investment organisations. In a similar manner the process of underwriting operations also gain huge exposure through the codification of data sets enabled by information technology processes and thereby helps in productivity enhancement in the insurance industries. Moreover, Matassa, Neirotti, and Paolucci (n.d.) also state that extensive use of information technology in the financial services industry helps in the process of rendering better customer services. It is widely observed that the development of the phone banking system and other critical customer servicing operations are largely enabled through the development of the information technology interface. Further huge amount of deregulatory practices enabled in the organisational sphere also tend to render greater impact in changing the productivity sphere of the concerns. Owing to the process of large scale deregulation the financial companies are facing large amount of competition which in turn affects the organisational productivity. (Matassa, Neirotti, and Paolucci, 1-7). Enhancement of the organisational changes works to improve the productivity of banks and other financial institutions. To this end, Leung (2004) observes that large scale incorporation of information technology helps in developing the communication paradigm in the financial services industry. Furthermore the banking and other financial services industry through the extensive use of information technology can work for the development of external wings catering to outsourcing activities. Thus the banks of one country through the information technology parameter can go for massive expansion in other foreign markets. This helps the financial institutions to gain large number of consumers in the international arena which thereby helps the financial firms to augment their revenue and market share. Hence it is observed that expanded use of information technology in the financial services industry greatly helps in enhancing the productivity and performance parameter of the financial industries. Leung (2004) also states that increased use of information technology products and processes in the financial industries help them to create an interactive atmosphere in the operational paradigm. This large scale interaction enabled helps the banking organisations to help address customer issues in a much faster manner. Development of the business and consumer interface in the banking and other financial services industry help them to gain increased return on the investments rendered behind the installation of developed technology. Investment banks operating on a highly sophisticated sphere can enhance on the Return derived from large investment activities by conducting a feasibility study before rendering such and again through close monitoring operations enabled by the information technology environment. (Leung, 8-9). Methodology The above paper focusing on the effects of organisational change on the productivity and performance parameter of the different industries strongly recommends the study of large amount of literary sources. Hence the research methodology which can be largely related to such stream is the secondary research method. The use of secondary research is highly recommended in these cases against primary or experimental research activities owing to certain advantages. Firstly it must be noted that with the increased development of information technology the researcher can come across large volumes of books, journals and other literary data in a much lesser time span. This helps the researcher gain large amount of knowledge which in case of primary research would have become a highly time consuming function. Secondly the use of secondary research methods helps the researcher to gain hold of large volumes of authentic data sources. Books and Journals written by eminent authors help in gaining a better understanding and thus reduce the dependence on primary research which mainly gathers information from general sources through the process of interviews. Again the extensive use of secondary resources also helps the researcher to reduce the cost of research to a large extent. On the contrary dependence on primary research activities involves generating large amount of research expenditure and also needs the recruitment of a research assistant. Finally secondary research also acts as a background behind the conducting of research operations for it helps the researcher to gain an initial knowledge of the market and other operational and environmental parameters before proceeding to conduct research. From the above discussion it becomes quite clear that use of secondary resources helps in effective accomplishment of research goals. (Kiecolt & Nathan, 1990, pp.11-12). Further the paper is also observed to conduct research activities on changes in the organisational systems and its effects focusing on a particular industry like the organizations belonging to the financial services sector. The focusing on a particular case creates the demand for use of another research methodology called the Case Study based research. Studies reveal that case study based research helps the researcher to focus on a specific area and thus reflects optimal utilisation of the research resources. Increased focus on a particular area helps in generating a clear understanding of the specific research problem. Again case study based research also helps the researcher to conduct the research analysis all by oneself and thus reduce the chances of incorporating more number of people. This fact thereby contributes in the reduction of potential research cost. Case Study based research also helps in enhancing the scope of the research for it helps the researcher to conduct the research study from different angles. Such process generates a holistic understanding of the research problem and thereby helps the researcher to find potential solutions for such. Further case study based research helps in rendering potential analyses in regards to the business problem through use of data analysis using both qualitative and quantitative data sources. Integrated use of such research tools enhances the research quality and thereby augments the parameter of authenticity. Case study based research also makes extensive use of large amount of data sources pertaining to company reports and government fact files. This large amount of data sources help the researcher to generate enhanced efficiency in the report which can be extensively be used for other research activities at a future date. Hence use of both secondary and case study based research helps researches like the present one to become rich in quality and style in fulfilling the required objective. (Naumes & Naumes, 2006, p.64). Reflections The reflections part focus on showing practical implications of the effects of organisational change in affecting the performance and productivity parameter of the industries. In this regard it can be mentioned that the incorporation of information technology in the firm’s environment led to the increased pressure on organisational cost with also hindering productivity in a number of cases. Moreover in case of the banking system the rise in the activity pertaining to regulatory mechanism affected the performances of the organisations. It is observed in this regard that increased incidence of regulatory mechanism made the banking organisations lose a major chunk of their profitability especially in the short time scale. On the contrary the rise of the regulatory dynamics in the international level led the other financial organisations gain the advantage of saving their costs and expenditures. Hence a reduction in the cost structures of those firms made it possible for such to gain higher operational margins. Again other organizational transformational process rendered in banks involves the incorporation of information technology in large scale which led to the formation of a highly specialised team working on support functions. This enhanced technological environment has helped the financial institutions like banks to progress to gain hold of larger markets both at the national and international level. Further the process by which the banks used to deliver services to the customers also countered paradigm changes owing to the incorporation of the technological interface. Banks through such means became much more accountable to the public and that helped in enhancing its productivity and performance parameters. The third round of organizational transformational process which was enabled in regards to the banking industry was due to the rise of the mergers and acquisition activities. This set of activities helped both the stronger and weaker financial institutions like banks and investment companies to perform more effectively. Larger banks with huge number of potential resources through the gaining hold of small banks happened to gain large number of consumers and additional market areas for expansion of business activities. Similarly the weaker banks not being able to perform alone got the increased influence of the larger banks which had acquired them to revive themselves in the financial market. These smaller banks started operating more efficiently because of the presence of financial and technical support rendered by the major financial institutions. Thus acquiring and merging of the financial corporation helped the stronger and weaker units in a dual manner. (Moleneux, 23-28). The world economy has witnessed drastic changes over the last one decade. The rise of the Internet as a business enabler, the growing prominence of the emerging economies, the combined clout of the BRIC countries coupled with the sluggish growth of the European, US and the Japanese markets, collapse of Lehman Brothers – the world economy had never been the same. Financial institutions, being highly coupled with the world economy, have witnessed similar turmoil. These changed dynamics has forced financial institutions to embrace change – not only in organisational structure but also in the basic way financial institutions conducted their business. However, it has been argued that organisational changes in financial institutions are generally accompanied by moderate to fierce internal employee resistance. Organisational changes in financial companies led to ambiguous and clashing in job roles, but more importantly, decrease in perceived job stability. It has been observed that after financial institutions have incorporated organisational change to adapt to changed market scenarios, they have ended up becoming more customers facing. This change in job orientation, from operational to customer oriented has caused sufficient problems with employees. (Lin & Chiyang). Another aspect of organisational change is employee attrition. Organisational changes are generally associated with periods of chaos. After a proposed change has been implemented in an organisation, employees are unsure of new job responsibilities, deliverables, powers and reporting structures. This creates considerable job stresses which, a lot of times, lead to employee attrition. Employee attrition is harmful for an organisation, more so for knowledge based organisations like financial institutions. Human resources, or employees, are the most important assets for a knowledge based organisation like a financial institution, and when employees leave they take away with them business intelligence, experience and a whole lot of other unquantifiable assets. In worst cases, employees can also take away key accounts and contacts with them which may directly lead to financial loss for the organisation. So, companies should plan out properly before implementing a proposed organisational change. More importantly, organisations should ensure that all employees are clearly communicated in details about the proposed organisational change. (Cameron & Quinn). Another critical aspect that is integral to any organisation change implementation plan is maintaining or creating organisation culture. Researchers have argued that companies operating in seemingly commodity markets have outperformed their competitors by miles, start ups with miniscule money or manpower have successfully held their ground, and in lot of cases, beaten goliaths. It has been argued that the success of Wal-Mart, in the backdrop of other large retailers’ bleeding balance sheets, can largely be attributed to its organisational culture. Similarly, successes of companies like Southwest Airlines, Tyson Foods or Circuit City while their competitors have lost money cannot be attributed to either technological strength or any other quantifiable USP. These seemingly irrational successes have been attributed to “organisational culture”, also called the DNA, of an organisation. Organisation cultures are very closely interconnected with the structure of an organisation, and in lot of cases, the organisational culture is an extension of the organisational structure. Decision makers, while ideating a changed organisational structure and the change implementation plan, have to be extremely careful about the effect of the change in organisational culture. This is still more critical as an organisational culture, unlike an organisational structure cannot be built on paper and successfully implemented in an organisation overnight. (Cameron & Quinn). Time Scale and Resources The proposal outlined above is developed on the basis of an effective time scale in which the resources are gathered from several ends generally secondary in nature. Further the data gathered from the relevant resources are rendered under relevant sections to generate an authentic report focusing on the effects of organizational changes on the productivity parameter of the different firms. These activities can be analysed based on a Gantt chart which would reflect the time scale used in methodically fulfilling the research objective. Week 1 Week 2 Week 3 Week 4 Formulating Research Questions xxxxxxxx Focusing on Different Literatures xxxxxxxxxxx Designing the Methodology xxxxxxxxxxx Evaluation of the data gathered xxxxxxxxxxxxxx The above representation based on the preparation of the Gantt chart shows the specific time spans for the relevant activities conducted in regards to the project taken. Rendering a four week time period helps the researcher to gain hold of large amount of data sources for the effective preparation of the stated report. Gantt chart prepared above helps in reflecting the total break-up of the task conducted to comply with the fulfilment of research proposal. References Cameron, S. Kim and Robert E. Quinn. Diagnosing and Changing Organizational Culture. 1999. May 4, 2011 . Hakanson, Christina. Effects of Organizational Change on Firm Productivity. April 21, 2008. May 3, 2011 < http://www.snee.org/filer/papers/465.pdf>. Matassa, Calogero, Neirotti, Paolo, and Emilio Paolucci. Information Technology, organizational change and productivity growth: an empirical analysis of the Italian insurance industry. No date. May 3, 2011 < http://csrc.lse.ac.uk/asp/aspecis/20030112.pdf>. Greenan, Nathalie. Productivity, inequality, and the digital economy: a transatlantic perspective. MIT Press, 2002. Bertschek, Irene and Ulrich Kaiser. Productivity Effects of Organizational Change: Microeconometric Evidence. October 2003, May 3, 2011< http://ftp.zew.de/pub/zew-docs/div/ibe_uka_gesamt.pdf>. Kangasniemi, Mari and Catherine Robinson. The impact of organisational change on productivity. Sectoral evidence from the UK, 1995-2005. August 2008. May 3, 2011 < http://www.euklems.net/pub/no29%28online%29.pdf>. Kiecolt, Jill K. & Laura Nathan. Secondary analysis of survey data. SAGE. 1990 Leung, Danny. The Effect of Adjustment Costs and Organizational Change on Productivity in Canada: Evidence from Aggregate Data. January 2004. May 3, 2011< http://www.bank-banque-canada.ca/fr/res/wp/2004/wp04-1.pdf>. Lin, Nan-Hong and Yu-Han Chiang. A Study of the Relationships between Organizational Change Perceptions and Turnover Intention in the Financial Industry-The Mediating Effects of Job Satisfaction and Job Stress. (2009). May 3, 2011 < http://bai2009.org/file/Papers/1345.doc>. Naumes, William & Margaret J. Naumes. The art & craft of case writing. M.E. Sharpe. 2006 Moleneux, Phil. Do Mergers Improve Bank Productivity and Performance?. 2009. May 4, 2011< http://www.suerf.org/download/studies/study20094.pdf. Read More