Organizational Change in Australia and New Zealand Bank - Case Study Example

Running Header: Management and Organizational Change Student’s Name: Lecturer’s Name: Dirk Maclean Tutor’s Name: Dirk Maclean Course: BMO6505 Work and Organizational Systems & BMO 5520 Date Submitted: Introduction Organizational change in Australia and New Zealand Bank (ANZ) bank started in the late 1990s when John MacFarlane was the new CEO. This bank has the largest number of employees both in New Zealand and Australia amounting to 35, 000 people (Bushfield 2011, pp. 314). Bushfield (2011, pp. 314) further explains that ANZ has a wide client base of over 6 million customers worldwide who need banking products and services such as mortgages, personal loans, credit cards, savings, transaction banking, deposits and financial consultation when managing small businesses. McFarlane and his team of managers initiated a transformational program in ANZ for successful outcomes (Bushfield 2011, pp. 316). Under his leadership, he developed and managed the change programs that intended to achieve sustainable advantages, long-term competitive advantage for ANZ over a long period of time. Banks in Australia during the 90s were in bad shape most resulting to branch closures, increasing of service fees and corporate layoffs. John McFarlane realized that change needed to be incorporated quickly to save the bank from folding and the first thing he did was to freeze the closure of branches (Bushfield 2011, pp. 316). As the new CEO, he advocated for the employment of women in the bank. This also led to using talent and performance management to find the best way to control and manage employees’ interests, values, competency and confidence into achieving organizational goals while other competitive banks took a different route (Bushfield 2011, pp. 316). ANZ improved in satisfying the shareholders, employees and customers worldwide by offering top services and products and also fostering community programs to help the disadvantaged groups in Australia and New Zealand improve into financial independency. 1. From the Structural Frame and using appropriate balance of theory and practical evidence from the case, identify and discuss the structural issues relevant to transformational change at the AZN bank. What would be the benefits and limitations of taking a structural perspective? Structural Frame is the skeleton of financial operations in AZN bank in all its branches in New Zealand, Australia, Shared services and Institutional (Bushfield 2011, pp. 314). This frame influences the operations of all businesses carried out by the bank which is three fold: retail, commercial banking and Operations, Technology and Shared Services (OTSS) (Bushfield 2011, pp. 314). Structural change is composed of organizational structure and process. Organizational Structure Organizational structure consists of stakeholders, managers and employees. Stakeholders are the people who can make permanent decisions about change in AZN bank using their political powers. These people help to authorize change or ignore plans made to change the organization. The stakeholders of AZN are profit oriented and any plan to change the organization for a better future is approved by them. Managers in the past have shown incompetency according to John McFarlane who worked as AZN CEO for ten years from 1997 -2007 (Bushfield 2011, pp. 321). Senior managers who controlled very important processes were redundant in their work for a very long period of time. This affected the organization greatly because managers are in control of employees who control company products and services. Senior managers undergo extensive training and performance review often to prove they can be of quality service. Employees are the people who are close to AZN clients because of the products and services they provide. In a long period of time, employees in many branches were unable to dedicate their time and commit to their jobs wholeheartedly. This meant that initiative, productivity and creativity were undermined. It led to poor financial performance and cultural inertia and a new transformational program was developed to bring the limiting factors into light and close risk gaps. Talent management is a change in AZN that was developed to improve services provided by employees (Bushfield 2011, pp. 319). A curve was created whereby 20 percent of the employees were at the top of the curve, 20 percent at the bottom and the other 70 percent in the middle. This means that those at the bottom have to be trained, coached and mentored in order to improve their outcomes. The bank started paying employees according to performance which meant that instead of controlling the staff’s price, the banked started to control volume of staff. AZN maintained staff that could perform better and paid them better as compared to hiring a lot of people who could not perform tasks successfully. Processes AZN offers retail products and services, commercial banking, Institutional and Operations, Technology and Shared services (OTSS). Under retail, AZN offers credit cards, transaction banking, mortgages, deposits, savings and personal loans (Bushfield 2011, pp. 314). Commercial banking in AZN helps to deliver client solution to smaller corporate and medium enterprises. Institutional delivers a wider variety of financial services and products to ANZ’s institutional and corporate globally. OTSS in AZN is its core support division. It provides IT infrastructure and solutions globally and also shared services including; accounts payable, sourcing, human resources and environmental sustainability (Bushfield 2011, pp. 314). To carry out all these processes and be of value to stakeholders and clients, employees has to change their values to foster integrity, accountability, collaboration respect and finally excellence. Benefits of Taking a Structural Perspective Structural Frame in transformational change is the most important thing an organization can do to improve its standards. This is the section where stakeholders, senior managers, employees and all organizational operations take center stage into improving the outcomes of the business. Workforce performs better which means the quality of services is improved substantially. Stakeholders and clients will be loyal and trustworthy of the organization when this type of perspective is taken for organizational change. Services improve after senior management has effective leadership and operational skills while employees are competent, creative and productive in achieving organizational objectives and personal goals. Changing the structure of the organization is changing the foundation of the business which means everything that affects the business will be changed after processes, policies and organizational structure is changed. This change is useful for future expansion because the organization will be changing its structure often to fit in the constant changing world affected by advanced technology, social activities and skills acquired on new techniques. Limitations of Taking a Structural Perspective Structural Frame should be one of the perspectives that need constant change in an organization. This means that if a branch of AZN bank is not productive in its services, it will be closed and many people will lose their jobs. Senior management is composed the people closer to employees in the bureaucracy system of management but if they are not replaced in regard to redundant performance, the organization will face a long period of financial problems in all branches. Some changes in an organization are very strict because it means some positions will be redeployed for skilled and competent work force and lay off incompetent and those resistant to change. 1. From the Human Resource and using appropriate balance of theory and practical evidence from the case, identify and discuss the human resource issues that impeded and facilitated the Agency’s IT Project implementations. What would be the benefits and limitations of taking human resource perspective? Human resource is an organizations human or intellectual capital. This refers to employees’ needs, roles, interests, skills, experiences, values and interactions. Many organizations who are competitors can replicate their competitors’ business strategy, programs and even business models but they will not have employees with the same skill, confidence, competence, goals and values. This is the reason why human resource is very important in organizational change because it affects a substantial large amount of business activity and outcomes in the organization. In ANZ, managers and employees work together in performance management to improve the quality of services provided (Bushfield, 2011 pp. 318). Previously, employees and managers were unproductive and lacked the driving force to achieve personal goals and organizational objectives. Change is composed of many elements such as programs, business strategies, solutions and risk management but change is successful after people have changed. Changing the system is not enough but changing the system and people who handle the system is what makes organizational change have value in the community. Under human resource, ANZ decided to employ the use of talent management and performance management. Performance Management According to John McFarlane of ANZ, performance management is important because it has comprehensible Key Results Areas (KRAs) across customers, financial, community and people’s measures (Bushfield 2011, pp. 318). This change is incorporated in all work-units in the organization. This means, divisional managing directors, directors of business unit management, front line support and staff facing clients have to undergo performance management. There are three main stages of performance management: planning, coaching and assessment. Performance planning is when the organization lay down the objectives and achievable outcomes of this change. This also involves calculating the available resources and employees willing to change. Performance coaching involves managers and outside professional trainers meeting with employees on a frequent basis to incorporate customized skills meant to benefit the organization, the employees and the community. Coaching goes hand in hand with mentoring whereby, employees who are severely resistant to change are counseled and advised on the needs of acquiring new skills (Bushfield 2011, pp. 318). This stage shows the employees that competence and confidence is very important to the organization to be retained as people who have great value for themselves, stakeholders and clients. ANZ also provides its employees with learning opportunities for 12 months in order to improve their skills and experience hence adding value to the whole organization (Bushfield 2011, pp. 320). Performance assessment is carried out after every six months to check out how the employees and management have incorporated skills and how these skills are effective in the organization. Assessment in some departments are done frequently to keep employees alert on their performance and at the end of every year, employees with the best performance are rewarded. The whole workforce is given end of year bonus to encourage quality performance and also retain those employees who are of high value to the organization. Talent Management Talent management in ANZ is a strategy employed in organizational transformation to improve the performance of employees. Talent management is planned and assessed by line HR managers and line managers to get the top 100 employees in all the branches to improve their skills and experience and later advance in careers that have better salary and good working conditions. Talent management requires the right skill for the right employee at the right time with available costs. ANZ plots a curve and top employees in performance are plotted in the top 20 percent, 70 percent of employees with average performance are in the middle of the curve while those who perform poorly are at the bottom 20 percent. This curve is used to evaluate the employees who will advance in their career opportunities in the organization. There are three distinct stages of talent management. Emerging Leader Radar identifies and develops leaders at early stages and this is done by line managers. Lead is in a senior level talent management stage that assesses executives who possess high performance skills and experience to hold a top position in ANZ. This top position is one of the thirty top roles in ANZ bank. Lastly at the influential position, the successful person with top skills and experience will work with the CEO (Bushfield 2011, pp. 319). Benefits of Taking Human Resource Perspective Human resource perspective in organizational change in ANZ is very important because this is where employees’ talents, interests, goals and roles are identified and developed. Human resource is the only thing that can facilitate organizational change because it is comprised of employees’ intellectual property and change is more incline to human resource as compared to company systems and strategies. Change in people’s skills, performance, interests, attitudes and goals improves the organization on a financial and cultural level. The entire community also benefits from this change when employees are more committed to their work and passion meets talent. Limitations of Taking Human Resource Perspective There are few limitations for organizational transformation using human resource is resistance to change resources. Some employees especially the older generation will decline new technology skills because they were comfortable with their positions before technology was introduced and continued to advance. This resistance will cost the bank a lot of valuable time. Resources used to conduct performance management and talent management involves hiring professionals to coach, train and even mentor employees to achieve their goals in life. If this resource is limited, then only few people will be considered which will be considered as biasness. 2. From the Symbolic Frame and using appropriate balance of theory and practical evidence from the case, identify and discuss the symbolic and cultural issues relevant to transformational change at the AZN bank. What would be the benefits and limitations of taking the symbolic frame perspective? Symbolic frame is the unique organizational culture motivated by ceremonies, stories, heroes and rituals. Symbolic decisions are made by effective leaders who allocate resources, give job assignments, initiate internal promotions, allocate space and reorganize the business. This impacts the staff performance and morale. Culture of an organization is when a collection of people working in the same organization work towards a common goal to benefit the organization and community. ANZ has a symbolic frame of John McFarlane, community based programs and cultural change that help people improve their standards of living. Leaders manage symbolic decisions in the organization and manipulate these decisions to produce desired effects. John McFarlane’s Tenure John McFarlane is a hero in the history of ANZ bank because of his leadership and roles to financial improvement in ANZ bank. McFarlane started to work for ANZ in 1997 when the bank was experiencing financial problems and branch closures. He improved ANZ bank customer satisfaction, community recognition and staff engagement (Bushfield 2011, pp. 321). MacFarlane turned around ANZ bank’s financial performance and satisfying the needs of shareholders. He implemented and led a cultural strategy which transformed the bank into incredible heights of success. Shareholders were concerned when he retired after ten years of managing and leading the organization into success. He however calmed the shareholders by putting much emphasis on his successor, Michael Smith as a competent and effective leader (Bushfield 2011, pp. 322). Community Based Programs ANZ leads in financial literacy and inclusion worldwide. The program; Saver Plus has helped families from poor backgrounds save money for educational purposes and also builds assets (Bushfield 2011, pp. 315). MoneyMinded is also a program that was introduced by Michael Smith in 2008 as an organizational change to help people to build skills, confidence and knowledge so as to manage their daily and long term financial matters. Financial counselors were provided to deliver these programs in an attempt to help the community which in turn attracts potential clients. Cultural Change McFarlane and his change team instigated the Perform, Grow and Breakout cultural change in ANZ. Perform means that employees deliver financial performance and add value to shareholders, Grow has underlying principles such as strengthening revenue, brand and leadership and lastly, Breakout is intended to build the base for long term success and sustainable leadership (Bushfield 2011, pp. 317). ANZ led in the following 11 measures of ethics and value assessment: targets/goals, mission/aspirations, performance feedback, organizational approach, risk management, control and co-ordination of people, control and co-ordination of finance, operational control and co-ordination, motivation by using rewards/recognition, motivation by providing career opportunities, and inspiration in terms of importance/values. The Breakout strategy was very essential according to McFarlane in 2000 (Bushfield 2011, pp. 317). Bureaucracy was eliminated giving employees and managers the freedom they deserved in making essential decisions that affected the organization positively. Major initiatives that facilitated cultural change in ANZ in 2000 were three fold: Breakout workshops, Charters and Consulting. Breakout workshops explore personal and emotional development of employee. This phase examines values and thoughts that make employees behave the way they do in interacting and understanding the organization’s values. Breakout charters are business projects hosted by ANZ focused changing processes to ensure cultural transformation in ANZ. Breakout consulting provides consulting and diagnostic services to help teams and business units in sustaining the desired culture (Bushfield 2011, pp. 318). Employees and managers go through this cultural change to figure out what they really desire from positions in the organizations. This change make employees have the freedom to choose the jobs that they desire most as compared to handling jobs they do not like (Bushfield 2011, pp. 318). Benefits of Taking the Symbolic Frame Perspective Symbolic frame has a lot of advantages in organizational change. McFarlane changed the organization in ways that are incredible and satisfied both clients and stakeholders. He implemented cultural change, performance management, performance talent and helped improve the financial status of ANZ over his ten years tenure. The cultural change also facilitated the big change whereby employees now choose jobs that they want to pursue for the rest of their lives. Passion and talent in such jobs make clients and stakeholders happy and it also improves the living standards of the employees. Limitations of Taking the Symbolic Frame Perspective In the end of McFarlane’s career, he left the organization without a trained successor and the organization had to employ an outsider while the CEO had ten years to mould another CEO to succeed him. He also made wrong decisions when using US telecommunications services that collapsed leading to great write-offs for ANZ. In the cultural change, people leave their positions to pursue what they truly desire in life which means that positions will be vacant for a while hence hindering business operations. Taking into Account the Benefits and Limitations of the four Frames a. What would be the best approach to take to manage change at the ANZ bank in the future Managing change requires good leadership, communication, resources, coaching and mentoring, sustaining momentum. Coaching and Mentoring Employees who are severely resistant to the organizational change will require personal coaching and mentoring. This is done to show employees that the global market community is in constant change and they will achieve great career and personal goals rather than become obsolete in a changing world. CEO successor will be trained and coached for a long period of time so as to avoid customers and shareholders’ distrust in new CEOs when the previous has retired. It is very important for customers and shareholders to maintain their loyalty so as to achieve bank goals. Resources Stakeholders should set aside funds for employee training in the organization’s premises rather than send their employees to expensive learning institutions. The new technologies are items and software that should be bought to successfully facilitate change. Third world countries sell computers, company phones and software at much cheaper prices than developed countries. These technologies are the same as those in developed countries and the Stakeholders can send senior managers to compared prices and make purchases. Motivation and sustenance should always be carried out in the organization. Giving employees free gifts at the end of each year will also motive employees End of year parties or bonuses are meant to retain employees and this will be of great significance especially when the employees have been trained to work in the new work environment. New technologies are being invented to make work easier and also faster. These new technologies need to be incorporated into the ANZ bank and employees trained to operate these systems for global economy purposes. The resources for these changes need to be set aside because technological change is an ongoing change in the global markets and employees need to embrace it to help the organization keep up with competition. Communication The best way to make all employees agree with new ideas is to communicate with them on a personal level. This means that leaders should develop and deliver communications. While talking to employees, leaders should take time to listen to what the employee have to say about organizational change and why they do not appreciate it. This form of communication should be tracked and also monitored to check if it the most appropriate method. The leaders should occasionally disagree and give evidence of the reasons why change is important in a constant changing environment. Other forms of communications can also be used to get employees on the side of organizational change. Employees can be promised income increase after training because it means that new skills require extensive working. Leadership Great leaders do not only help motivate employees and assure stakeholders of quality service but initiate, develop and achieve organizational objectives through the transformation. Leaders articulate a clear idea describing what the change initiative is determined to accomplish. Employees need a leader who is patient and understanding because not all employees will agree to change at once. Some employees will have difficulties adapting to changes because of fear of the unknown, change resulting in adverse effects and inadequacy to handle and deal with the transformation. However, leaders should take their time to personally coach and mentor such employees and this will create inter-professional relationship based on trust and respect. Listening to employees is one of the most important factors when considering change in an organization and leaders need to check out how employees react to organization change. Sustaining momentum The challenging phase in managing change is sustaining the momentum of adjusting plans and implementation. Changes in an organization can be met with severe resistance, departure of influential leader or dramatic sales reduction. Maintaining change has to be kept at the highest level for the organization to achieve its long term objectives even under the leadership of new CEOs or managers. Top leaders need to show strong and visible support to employees, customers and stakeholders for accountabilities and overall credibility. Training, coaching and resources need to be available at all times for new changes that affect the organization. Employee performance management plays an essential role in this stage in achieving personal objectives as well as organizational goals through goal setting, sharing feedback about goal accomplishment, rewarding employees for successful goals achieved and also addressing issues regarding performance. b. What kind of leadership would be needed to meet the challenge of a more successful approach to change management in the future at the ANZ bank? Charismatic Leadership Australia and New Zealand bank had McFarlane as a charismatic leader who used his change programs to captivate the attention of stakeholders and customers at the same time. Charisma is very important in leadership because stakeholders and customers need someone they can trust their investments with. Attracting potential clients worldwide is the work of a charismatic leader who has planned carefully and helped implement the change. Leadership in organizational change involves leading employees into successful outcomes by taking them on a step by step change program and allowing employees contribute in decision making instead of taking a bureaucratic system of change. When employees are engaged in contributing to changes in the organization, they will feel valued and respected because of their interests, values and competency in work. Great leaders are not born but created and charisma makes a person outstanding as a leader because of the ability to allure many people at the same time. Patience in Leadership Patience in leadership is what makes change occur in all departments regardless of time. Employees and stakeholders who are resistant to change take a longer period of time to adapt to change. During this period of time, patient leaders need to encourage the employees and stakeholders the usefulness of having organizational change for the sake of the organization, the employees, customers and stakeholders. Patience also means that employees will take a substantial period of time to train and acquire new skills needed for the development of the organization. Change does not occur in a day but through a period of time with programs that foster successful outcomes due to employees’ performance. If change will take years, leaders must keep up the support and mentor employees into rising above their limitation. Self-awareness Leadership In the course of organizational change, some leaders will find that they will resist change when operations do not go as planned. Advocating for change is not enough for successful leaders but being part of the change is what takes the organization to the next level. Many leaders want employees to change as per their opinions but they behave differently. These leaders will face severe criticism not only from stakeholders and employees but the media and potential clients. When everything has been said, leaders need to walk the talk and encourage employees and stakeholders to follow their lead through actions that foster successful outcomes. Leaders who are aware of change need to search for informal leaders among employees to change other employees who are severely resistant to change. Informal leaders can either be other employees who adapt to change or those resistant to change and making them responsible for the change itself. This will make employees responsible and work without frequent supervision. Leaders with Communication Skills Communication skills is very important in a person leading more than 35, 000 people in the organization. Setting milestones and communicating with employees using the most effective method will not only simplify that change but inspire people to change for a better life. Communication between leaders and employees ensures that change is successfully implemented and feedback assessed for different communication methods or those that are improved. Leaders will show the employees and stakeholders the phases of change and the things that the workforce needs to give up to accommodate change. This is informed choice where every employee is included in decision making and choosing the best action according to interests, preference and beliefs. Leaders update their employees on recent tools and resources available for change and the period of time expected for the change to be completed. Developing symbols, rituals and ceremonies in the company because of new organizational change is the work of leaders with good communication skills. Employees need to be rewarded, recognized and end of year parties and bonuses included in salary package to promote change. Conclusion Organizational change in ANZ made the company very successful as compared to other banks in the late 90s up to date. Leadership skills contribute to the change because of coaching, mentoring, communicating, and rewarding employees for goals achieved during the change. Stakeholders also contribute in making the change happen by contributing resources needed for training employees, hiring competent workforce and having the most effective risk management plan. AZN has helped employees improve their living standards by providing opportunities for career development and also helping the disadvantaged group attain financial independence. REFERENCE Stacey Bushfield 2011, ANZ Bank: Leadership and cultural change in Graete, F, Rimmer, M, Smith A & Lawrence, A, Managing Organizational Change 3rd Edition, Wiley QLD. . Read More