Zurich Assurance Company History - Essay Example

? Topic: Lecturer: Presentation: Introduction Change is a constant feature in modern organisations which management has to deal with. Organisations operate in a very turbulent environment due to increased competition and globalisation coupled with economic, social, political and legal changes. A successful organisation has to find ways of adapting to the environment or ignore at its own peril. Change is thus an ongoing process at strategic and operational levels and what matters is the ability of management to manage change. Various change models have been advanced by theorists such as Kotter’s 8 stage model, Kurt Lewins 3 stage model or field-force analysis (Jones, 2009). However, the change model to be utilised in this case is the Lewin’s 3 stage model of unfreezing, change and refreezing to explain the change process. Though change is inevitable, it is a complex process that has drivers and resisters. The organisational structure and culture are vital elements in an organisation that can either inhibit or promote change depending on the situation. It is thus very vital to discuss how culture and structure can influence the change process in an insurance company bearing in mind that the insurance sector operates in a very dynamic environment. The company in this case is Zurich Assurance Company Ltd. There are other numerous factors that cause resistance to change and will be discussed briefly alongside culture and structure. In order to achieve this, the paper will be divided into several sections. The first section will be a brief background summary of the insurance company. Secondly, organisational change will be discussed. This entails discussion of strategic and operational change. Thirdly, the paper will discuss theoretical underpinnings of the organisation structure and culture. The next section will be explanation using examples of culture and structure influence selection of change strategies an development of effective change routines. Lastly, conclusions will be made. Organisation Background Zurich Assurance Company was founded in 1985 to provide insurance services to clients. Its mission is to help customers to understand and protect themselves from risk. It is a large company with over 10,000 employees operating in different parts of the country. The company boasts of its values embedded in its rich culture and which determines how things are done. The company beliefs in integrity, team working, support for the community and abiding with rules and regulations and sustainable value creation. The company has a divisional organisation structure whereby every division handles its own product and employees but resources and controlled centrally. The whole organisation is under the leadership of a chief executive officer. Organisational Change Effective change management according to Senior (2009) depends on the management but whatever the case the impact of change varies according to industry or sector. The change process as per Lewin’s 3 stage model begins with unfreezing. This is where the company analyses its internal and external environment to identify any gaps that exist and thereby identify need for change (Paton & McCalman, 2008). The changes may need a strategic change or operational change depending on the urgency and importance of change. Strategic changes are long-term in nature and affect the whole organisation. They involve creating new vision, developing strategies, implementing the changes, dealing with resistance and evaluating the effectiveness of strategy so as to review. It is a cyclical process. Operational changes affect only a small group of staff such as a department or team and involve changing particular activities as opposed to the whole system. The strategic change process involves extensive planning and begins with environmental scanning to determine the need for change. This involves conducting a SWOT analysis to determine the strengths and weaknesses as well as opportunities and threats for the company. This allows the company to keep in line with its environment and take advantage of the opportunities available to overcome its weaknesses and deal with threats (Paton & McCalman, 2008). A PESTLE analysis is also suitable to determine the drivers of change such as political, economic, social, and technological and laws and regulations. A company must be aware of these factors and how they affect the company so as to be able to strategically plan. Assessing the environment enables the company to create a new vision and mission for the company as well as objectives or strategies to achieve it. The next stage in the process is change. This is the implementation stage whereby the real change in behaviour is expected. This involves formulating policies and strategies to achieve objectives which are then implemented through operational changes. Mintzberg and Quinn (1991) argue that change should never be forced on people rather a careful planning, sensitive implementation, and consultation is vital. This is supported by Paton and McCalman (2008) who argue that the change should be understood and managed in a way that people can cope effectively. Throughout the process, communication with those affected is vital to inform them of the progress and also involving them in making decisions so that they can own the process otherwise it may lead to resistance. This is where the issue of organisation structure and culture comes in. The organisation culture determines how things are done in the organisation and entails norms, values, and beliefs held by people working in the organisation (Hofstede, 1994; Jones, 2009). These are analysed and changes made to allow effective implementation. In order to make employees buy-in the change, the change agent has to explain to them the benefits of such a change. For example, having an effective performance management system would enable the management to know how individuals are performing and reward them for their achievements. It would also motivate workers to offer high quality services hence attract and retain customers. It would also mean employees are well remunerated and that recruitment process would ensure people with the right skills are selected thus job satisfaction (Handy, 1993). The most important thing is to let all employees participate in the change process so that they can be committed to achieving the set objectives. Providing short-term wins to reinforce the change is essential in convincing staff of the importance of the change. The last stage in the change process as per Lewins model is refreezing. This involves internalising or institutionalising the change such that it becomes part of the organisation culture. New behaviour acquired during the change stage is reinforced through rewards or recognition so that it can be repeated (Jones, 2009). Though change is constant Jones argues that some stability is needed so as to reinforce the changes and allow for future changes to take place otherwise the employees would not trust the management in effecting changes (p. 345). This is supported by Mullins (1999) who argues that a company at this stage has a stable organisation structure and consistent job descriptions. Ways to sustain the change are also developed and barriers dealt with so that the change can be effective. Management support and training is very important at this stage so that everyone can be confident of what they are doing and have job satisfaction. This eliminates fear for change that makes individuals to resist future or even current changes. Organisation Structure Different organisations have different structures depending on size, strategy, culture, technology, complexity and the industry or sector it operates in. Small size companies are assumed to have an organic structure but as they grow in size rules and regulations become stricter and the organisation becomes bureaucratic. However, a horizontal rather than vertical structure is preferred by most organisations since it allows for effective communication and is flexible in responding to changes (Schein, 2010). A bureaucratic structure is characterised by formal rules and regulations, vertical communication, clearly defined roles and responsibilities and formal reporting relationships. Decisions are made by the top management and passed down to lower levels thus employees do not participate. Communication is from top to bottom such that information passes through various levels to reach management. The manager rarely delegates authority and responsibility and if it happens, authority remains with top manager. There is strict supervision and individual work is emphasized as opposed to team work and as such rewards are individual based (Mullins, 1999).The problem with this structure is that monotony of work due to specialisation creates boredom and loss of motivation. Employees’ non-participation in decision making also reduces their morale hence reduced performance. It also hinders learning which is facilitated by team work thus making the company not flexible to respond to changes. An organic structure has a low degree of complexity, formalisation and centralisation. Communication is enhanced through horizontal integration; for example, use of cross-functional teams or use of matrix structures. This transforms the organisation to a learning organisation very flexible to changes in the environment (Buchanan and Huczynski, 2010). Employees participate in decision making and communication is bottom up or in all directions. As such the company is able to manage change. As opposed to routinized tasks, employees can move across jobs thus increasing motivation and also employees gain different skills which would enable them to remain relevant in case of any changes. The management also delegates responsibility and gives power and authority to carry out those responsibilities and team work is encouraged. Autonomy allows employees to carry out their duties effectively without supervision (wide span of control) since they are more engaged and committed. This structure is very effective in responding to changes. Organisation Culture This entails the unique norms, values and beliefs shared by members of an organisation. These are embedded in the organisation vision, mission, and objectives and detail how the members are supposed to behave or the way of doing things (Schein, 2010). Some companies are differentiated in their way of dressing, the company history and heroes, rituals, working practices and workers attitudes. For example, if the company’s vision is to be the leading company in the world it has to act in a way that would enable it to reach such future. Some companies are known as leaders in terms of quality, cost leadership, customer orientation, and labour turnover. The vision sets the direction for the company and forms the basis for formulation of mission and objectives. As such for the organisation to be effective in dealing with changes it needs a focused leader who can set a clear direction for the company. The culture of the organisation also determines the structure such that if the company values teamwork, then a bureaucratic structure cannot serve this purpose. Companies have ways of doing things entailed in rules and procedures and it is very difficult to change what people have been used to (Hofstede, 1994). For example, the company has procedures on recruitment, performance management, training, how work is shared and communication procedures. People also have their own attitudes and behaviours which are difficult to change and form part of the organisation culture. If the company does not value diversity, then it may have problems dealing with changes in the environment as some employees are conservative and inflexible change. Diversity also enhances creativity and encourages learning such that the company is always ready to adapt to any changes (Senior, 2009). Culture also influences how rewards are managed. An individualistic culture does not entertain team work thus performance management and rewards are individual based. Organisation Culture and Structure and Organisational Change Organisation structure shows the reporting relationships within the organisation and levels of authority, responsibility and distribution of power (Thomas, 2005). Zurich Company has a divisional structure that allows teamwork and availability of resources. One way structure inhibits change is that each division has a hierarchical structure making communication difficult. Communication and empowerment are essential if change has to be effected (Handy, 1993). Failure to involve employees in the process is detrimental to change as they would not buy-in the idea. In Zurich, decisions are made by top management in each division without involving employees thus employees cannot give their views on matters that affect them. This means when effecting changes, employees are not involved and this increases the likelihood of not accepting changes especially if they have great effect on them. The organisation structure also determines how tasks are shared and influence the reward system. In most cases, making organisation changes require making adjustments to the structure; for example, by encouraging cross-functional teams and horizontal communication thus making organisation more responsive. The implementation of change requires that the management delegate authority and responsibility and offer support to those in charge for effectiveness. However, if management does not give the leaders authority to carry out their duties change is inhibited (Jones, 2009). At Zurich, management delegates responsibility but not authority. This denies team managers the autonomy to carry out duties hence are always sceptical of change. If the manager is supposed to effect changes but does have ability to lead the people then change is doomed to fail. Managers should be allowed to carry out their responsibilities and top management to facilitate the change (Paton and McCalman, 2008). Implementation requires each employee to be given a role to play so that objectives can be achieved. However, if roles are contradictory or employees do not like their new roles change cannot be effective. Employees should be given resources in terms of skills and tools needed to perform their work. For example, at Zurich the employees are given enough training to update their skills and as such do not fear change as they are fully equipped. The structure also affects culture of organisation. It distributes tasks to individuals and they in turn get used to doing these tasks. They develop a culture of how to do tasks and would not entertain any changes (Biech, 2007). Some employees fear change as they do not have skills to perform other tasks or would not like to perform new roles. This can hinder change efforts and that is why companies are encourages to rotate duties to make employees adaptable to changes. The values embedded in the organisation can hinder change (Hofstede, 1994). There is a tendency at Zurich of turnover at all levels of the organisation. Putting new performance measures that stress on rewards at year end and ongoing evaluation may be resisted. The top management is also used to making decisions without involving low level employees and this may hinder the change from being accepted organisation-wide. Goldratt and Cox (1993) argue that employees should be involved from planning to implementation of the strategy and given support for change to be effective. The employees or sales agents are used to receiving a commission depending on daily sales and getting them to set goals for a longer period may be unacceptable to them. Some also fear that their positions are at risk if promotion systems changes thus resist the change. However, the organization has a culture of integrity, teamwork and sustainable value creation and this can give employees the morale needed to ensure customer needs are taken care of and high quality is maintained. The work practices in the organisation can also inhibit or support change. Reward management is very critical in the organisation. Culture influences the attitude of people towards rewards; some people value monetary rewards while others value non-financial rewards such as responsibility, recognition and autonomy. While implementing change, employees should be given rewards for their achievements so as to motivate them and get them committed to change (Jones, 2009). However, if the wrong rewards are given to employees they may have a negative consequence. For example, at Zurich employees are used to monetary rewards and if the company decides to offer them non-monetary rewards such as recognition for their work they may be resistant to change. The organisation should thus consider the values and beliefs of different employees before offering them rewards. Conclusion Change is constant in modern organizations thus what matters is how well the organization manages the change. The change process entails unfreezing, change and refreezing whereby the need for change is evaluated, sold out to management and staff, implemented and reinforced such that new behaviours form part of organization culture. The top management is expected to offer support, communicate effectively, and involve all stakeholders in the change process. Insurance companies thrive in a very volatile environment and as such should adopt organization structures that are flexible and can quickly respond to change and a culture that supports change initiatives. Most importantly management should not impose change but should facilitate involvement from people and make them understand why the change is important so they can accept it without being forced. References Biech, E. (2007). Thriving Through Change: A Leader’s Practical Guide to Change Mastery. USA: ASTD Burnes, B (2004).Managing Change: A Strategic Approach to Organizational Dynamics. 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