Perspective of Managing Change Held by Westpac and St George Bank during Their Merging Process - Case Study Example

ORGANIZATIONAL CHANGE Introduction Organization change refers to organization transforming and adapting to new things in order to survive, minimize costs and maximize profits. Organizational change is necessitated by the need to satisfy new markets and consumers, to improve productivity, to increase efficiency in service and product delivery and to cut in funding (Schnurr, 2008). Among types of changes are changes in strategies, changes in technology, changes in organizational structures and behavior and attitude changes of employer and employees. It is important to understand the type of change to use in order to bring stakeholders on board thus, reducing complications and problems associated with organizational change (Poole, 2000). Change may occur as planned or unplanned, change can be introduced in particular divisions of organization or the whole organization in general or changes that may be introduced gradually or radically. Among areas in an organization that require exclusive transformation include changing the mission and vision statements, operations restructuring and technology implementation. Moreover, change can be effected by merger implementation, implementation of new programs of production, distribution and service delivery and organizational restructuring (Schnurr, 2008). This report shall look at organizational change involving the merger process involving Westpac Banking Corporation and St. George Bank Ltd, stated as the biggest merger in the banking history of Australia and implications of future organization change based on my perspective on change management. Perspective of managing change held by Westpac and St. George bank during their merging process Westpac Banking Corporation, financial institution offering financial and banking services and St. George Bank Ltd, described as the largest fifth lender in Australia, merged in December 2008 (Bain, 2007). For effective organization change in both banking institutions, they set up internal and external integration plans, used various organizational change models to accelerate the merger process and counter external and internal pressures that were against the merger (Westpac 2008). Among the reasons that the two banks saw the need for fostering change and merge was to promote consumer and banking outlook by effectively satisfying their needs, and increase financial and management frameworks integral in preventing probable risk (Herald Sun, 2008). Additionally, promote a stronger brand image owing to the joining of the four retail brands known for consumer loyalty, strong consumer base, and their reputation of sustainability development. The two parties had similar products, common competitive pricing and similarity in consumer and community satisfaction ventures (Westpac 2008). Among external change management plan before the merger was, regulatory analysis as presented by Financial Services Union to protect employees against loss of jobs and ensure the merge would not result in reduced competition or form some sort of monopolization of the banking system in Australia (Hackshall, 2010). The Australian Competition and Consumer Commission ensured that the merger was for the greater good. Internally, the parties organized a three step procedure complete with timelines. Step 1; (1st of December 2008 - 31st March 2009), involved restructuring the top four management levels which entailed Group Executive, CEO, General Managers and size cutting the number of employees (Westpac 2008). Moreover, customer retention policies were established which involved first identifying customer segment risks, formulation of mitigation planning, monitoring and evaluating measures and ensuring the new merger did a procedure and policy alignment (The Age, 2008). Step 2; (1st April 2009 - 30th September 2009), entailed the parties amalgamating products, functions, systems, teams in aspects of finance, risk, treasury, reserves, people and risk (Herald Sun, 2008). Additionally, it meant they were to focus on offering new services to the new customer base of St George Bank. This amalgamation meant the initial size cutting of top four management level in step 1, trickled down to lower levels (Westpac, 2009). The second step also entailed Westpac including St. George customers in their operations like the banking arm and wealth management and making St. George brand stronger to allay fears of Westpac ‘taking over’ effect (St George, 2008). Step 3; (1st October 2009 - 30th September 2010), involved system integration, making final touches in aligning the new business, Westpac assuming all St. George’s assets and liabilities and taking control of reports as agreed upon by the parties and regulators on the merger go-ahead (Hopkins, 2008). Contingency change management model was reflected in the High Level Integration Plan used in that the various steps were timed and successful merge meant success in every step (St George, 2008). Additionally, the merge characterized the model by new structure implementation, aligning procedures and policies, maintaining customers initially. Then, access of support functions and new products were made available to new customers and finally, final business alignment (The Age, 2008). Impact of managing change upon the processes and outcomes of Westpac and st. George bank merger Although many agreed to the merge of Westpac Banking Corporation and St. George Bank Ltd, it faced opposition. Opposition of the merger was attributed to reduced competition in Australian banking sector, reduced profitability due to transactional costs, and lose of jobs as presented to the Australian Competition and Consumer Commission, (ACCC), by Financial Services Union (FSU) (Herald Sun, 2008). Use of the contingency change management model, did not necessarily imply that Westpac applied these change management style to all situations, but this occasion, the model was best suited because of the change was enormous and more benefits would be realized in terms of increasing schedules and structuring (Hopkins, 2008). Application of the High Level Integration Plan as an integration and merger tool, was efficient and did not result in lose of customer due to inconvenience or customer dissatisfaction, and massive employee turnover of the merging parties (Hopkins, 2008). The effectiveness of the process is attributed to strong similar organizational culture and alignment which reduced problems associated with management change like cultural clash thus increasing productivity and profitability due to employee growth and putting in place an effective transitional plan by both managements (St George, 2008). Their similar organizational culture would promote relationships and growth for employees and help foster greater organizational growth and accumulate more wealth than it would as single entities (Westpac 2008). Moreover, both parties worked hard to ensure the merge succeeded which included appointing Gail Kelly to run Westpac, who had previously run St. George Bank Ltd, allowing St. George to run semi-independently, not allowing a total takeover by Westpac and employees not being hit hard by re-training, relocations and re-branding (Dawson, 1994). Such a large scale merging had other implication which includes high probability of decreased competition due to barriers of market entry of new banks due to high cost of licenses, training, communication and other infrastructural expenses (Herald Sun, 2008). Further decreased competition was due to the Big Five consisting of Commonwealth Bank, St George ANZ, NAB, and Westpac becoming the Big Four, thus cost to consumers’ choice becoming too high (Hopkins, 2008). There would be likelihood of remaining small banks merging to add their own competitive edge which results to unhealthy banking and marketing systems (St George, 2008). Although the transition method used was efficient in merging such a massive change, it points to the weakness of not recognizing the customer’s need for competition, product and service value and consumer choice (Paton & McCalman, 2008). The method used however, tried to address this issues by informing stakeholders on the benefits of the merge like increased convenience due to increased ATM locations and bank branches and non-closure of St. George and running semi-independently by appointing its own CEO (Herald Sun, 2008). Other impact realized were increased market share for Westpac amounting to 25%, increased share values, and forming a much stronger customer friendly brand (Dawson, 1994). Additionally, creating an efficient and quality brand, growth in diversity for products and customers, stronger funding, increased capital positioning, increasing efficiency in service and product delivery and increased distribution framework and wealth accumulation (Grieves, 2010). The similarity in organizational cultures will help the merging parties serve and satisfy the customer better than previously would. How my Personal perspective of management change has changed over the last 13 weeks Over the past three months and one week that has passed, my opinion on management change has changed dramatically. Initially, I thought organizational change be it through mergers, implementation of new programs of production, distribution and service delivery or organizational restructuring, was an excuse for organization to cut off employees to increase profits. I believed the process of change management was unnecessary and that organizations would look for other ways to adapt in order to survive or remain afloat like banks can engage in selling debentures, loan acquisition from central banks, floating shares, and selling rights issues. However, from the study I have learnt that organization change does more good than harm. Rapid changes of world economies due to integration of political, social, legal, environmental and technological frameworks have increased the need for organizations to be flexible and adapt as quickly as possible in order to survive and fit in, in the new world order. Merges forms the baseline which organization can use to survive. For effective management of change unlike previous assumptions I had, need to align it’s self with the expectations of stakeholders involved, train and integrate team members, and communicate to them (Andriopoulos & Dawson, 2009). Additionally, for effective change management, the process should ensure it creates accurate strategies of transition to counter problems associated with change, allow communication effectiveness and use metrics like analyze the level of commitment of the management, involved with the transformation process (Eur, 2002). Management change helps organizations increase its market share, satisfy consumers better, improve quality of production, improve quality of service and products and improve the effectiveness and efficiency of service and product delivery (Paton & McCalman, 2008). Moreover, it helps improve share value for floated shares or shares to be floated and increase competitive strength of an organization than it would have, if it were a single entity. For an organization to decide on the type of change to implement, it needs to involve itself in decision-making process that involves taking into consideration the level of change, the organizations’ objectives, and change implementation strategies (Grieves, 2010). The decision should also entail the measurement systems to be used to evaluate the success of change, sequence of procedure based on timelines to effect change and ways in which the change shall be implemented. My change of perspective has been to the better, with increased knowledge that multiplication of measurement, control, agreed consensus, persistence and method, equals to change management success (Andriopoulos & Dawson, 2009). Initially, I assumed the change process is easy and can be done anywhere, anytime and by anyone. However, my perspective has been changed to understand that the process of change need skillful transitioning team, need to be done strategically to avoid massive turnover of employees and lose of clients and should be done in steps and in levels (Dawson, 1994). Levels of change management include anticipating and planning for the future, analyzing what business will best suit the organization and increase competence based on opportunities, threats, its strengths and weaknesses, implementing the process of re-engineering and process improvement thus preventing system and structural problems(Grieves, 2010). Implication of my present perspective on my approach to future organizational change By applying my approach of organization change will be beneficial for firms when handling change in management in the future. This is because management will concentrate more on making changes that align with the objectives of the firm, allow communication effectiveness, implement transitional strategies and methods which are effective depending on the type of change to be effected, thus reducing employee turnover and lose of customers (Paton & McCalman, 2008). By implementing organizational change based on my perspective, organizations in future will be able to bridge gap associated with fear of change and help consumer understand benefits to be received, due to use effective communication and implementation strategies. Furthermore, help organizations align employee training and skill upgrading with the change process thus increasing employee growth and improve quality of performance (Dawson, 1994). If in future, organizations ignore elements and components integral in change process similar to my present perspective on change management, this will lead to change failure where outcomes anticipated will not be realized, communication breakdown, decreased employee productivity due to increased fear of losing jobs, and low morale and lack of motivation (Andriopoulos & Dawson, 2009). Additionally, employees are likely to experience burn out due to increased work loads, increased concern for job and financial security, deteriorating working relationships due to internal competition and disrupted team projects and experienced and skillful employees may seek work elsewhere due to uncertainty associated with effecting change (Poole, 2000). If the process is undertaken by less committed leaders, inefficient transitional process are used and levels of organization change are not properly articulated, there are no effective lines of communication, the process will lead to client loss (Dawson, 1994). Moreover, the organization will not realize the set goals and objectives, organizations are merely taken over by stronger organizations thus losing client base and loyalty (Paton & McCalman, 2008). Negative implications furthermore, include decreased quality associated with the brand name and brand image, decreased value for shares, lost market share, inability of organizations to survive tough economic and financial times and inability to fend of competition in the market place. Effective organizational change therefore, is possible if both parties, the stakeholders and management are on board, by agreeing if the organization needs the change, which areas need changing and which do not need changing and when it is appropriate to implement change (Poole, 2000). Moreover, the management seeks to understand specific fears by employees or stakeholders involved their attitudes towards the anticipated change and seek their opinions on what can be done to allay their fears. Conclusion Organization change is a fundamental element for organizations that seek to survive hard financial and economic times associated in rapid changes of environmental, political, social, legal and technological climates in the new world order. Organization change may be in form of merger implementation, implementation of new programs of production, distribution and service delivery and organizational restructuring. In relation to the merge between St. George Bank Ltd and Westpac Banking Corporation, they used systemic steps, contingency change management model and semi-independence of St. George Bank Ltd to ease the transition process. The merge was necessitated by the need to promote consumer and banking outlook by effectively satisfying their needs, and increase financial and management frameworks, integral in preventing probable risk. Additionally, promote a stronger brand image owing to the joining of the four retail brands known for consumer loyalty, strong consumer base, and their reputation of sustainability development. The two parties had similar culture and products, common competitive pricing and similarity in consumer and community satisfaction ventures. My opinion of organization change has changed from viewing it as an excuse for organization to cut off employees to increase profits, to a necessary process in the development and life cycle of an organization. References Andriopoulos, C., Dawson, P. 2009. Managing Change, Creativity and Innovation. London: SAGE Publications Ltd. Bain, J. 2007. A financial tale of two cities: Sydney and Melbourne's remarkable contest or commercial supremacy. Sidney: UNSW Press. Dawson. P. 1994. Organizational change: a processual approach. New York: P. Chapman. Eur. 2002. Far East and Australasia 2003. Los Angeles: Routledge. Grieves, J. 2010. Organizational change: themes & issues. Oxford: Oxford University Press. Hackshall, M.2010. Banking careers: jobs that are on the money! London: Career FAQs. Herald Sun. 2008. ‘Westpac St-George Merger Planned.’ May 12. http://www.heraldsun.com.au/money/banking/westpac-st-george-merger-planned/story-e6frfh5o-1111116312969 Hopkins, P. 2008 ‘Watchdog says Westpac takeover of St George will not hurt competition’ Business Day. Paton, R., McCalman, J. 2008. Change Management: A Guide to Effective Implementation. Melbourne: SAGE Publications Ltd. Poole, M.S. 2000. 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