Overview of Westpac, Kotters Eight-Step Plan - Case Study Example

Westpac Name Institution Westpac Introduction In this turbulent business world, change in the Australian financial sector has become a more permanent issue among contemporary managers. Organizations experience the rising effect of change process as they struggle to remain strong and sustain competition in a growingly globalized and competitive economy (Crawford & Nahmias, 2010, p.406). The transformation in Australian Financial sector has made business think various strategies to use in the market since it is no longer business as usual. The situation does not even guarantee the top companies in the industry the top position in the market in the near future. Durie (2012) contended that the hard reality has prompted market leaders like Westpac to always implement change in a bid to gain market advantage and increase their market share. Companies like Westpac have often used some models of change to implement the process. One of such model is Kotter’s eight-step plan. Therefore, this report will draw on Kotter’s eight-step plan for implementing change to analyze the change process that has been implemented at Westpac. It will also evaluate the extent to which these and other strategies were deployed to create a ‘readiness’ for change at Westpac. Overview of Westpac Westpac is a financial service dealer and bank with headquarters in Westpac Place in Sydney Australia. Westpac was established in 1817 and has since grown and now operate several branches across Australia and New Zealand (Westpac Company, 2015). In fact, Westpac operates 1210 branches and over 2980 ATMs across these two countries. Its customer base has also grown considerably and currently reaches 12.2 million clients (Westpac Company, 2015). This makes it the largest in Australia by network. The bank is also rated as the second largest bank based on assets and makes it in the Big Four Banks in Australia. Over the years, Westpac has undergone some change management to increase its competitive advantage. Westpac Company (2015) stated that the latest management change being that of hiring a new CEO Brian Hartzer in February 2015. Some of the branches of these bank branches have been acquired by Bank of South Pacific. For instance, in January 2015, the Bank of South Pacific stated that it had agreed with Westpac to acquire some of branches and operations particularly in Vanuatu, Tonga, Solomon Island, Samoa and Cook Islands (Westpac Company, 2015). Change and How Kotter’s eight-step plan was used to analyze the change process that has been implemented at Westpac Over the recent years, Westpac has undergone various changes led by its former CEOs to be where they are today. In addition, Gluyas (2015b) claimed that the company’s new CEO Brian Hartzer has maintained that he will continue to adopt change through multi-brand strategy in leading a digital “revolution” and customer-service in reaction to strengthening investor and community expectations, increase their stiff domestic competition and competition in theweak international economy. Gluyas (2012) stated that during immediate former CEO’s reign, Gail Kelly brought different change, including effective customer service and merger with St Georges. Kelly’s term from 2008 can best be linked for her manic emphasis on customer service. Her change program termed “back-to-the-future” which was a program revolving around the customer service which partially developed to change a dominant culture of lending and increase deposit flows (Gluyas, 2015a). Gail Kelly also led a merger between Westpac and its former employer St George Bank in 2008 with an aim of increasing its customer base. Gluyas, (2015a) asserted that the merge cost Westpac $12 billion but at first worsen the bad situation which already existed at bank. Management experts claimed that Kelly did not get it right and the company did not get its fair share of the deposits. Things were not moving well for the new CEO and a period running into late was even worse when investors had started losing patience into the Kelly change approach as well as her brand mantra (Gluyas, 2015a). It was a sign of resistance to change which is often opposed by both employees and customers. Resistant to change by customers are attributed to how sometimes to take time to be effective. However, the afterwards results of success demonstrated that the investors were in hurry to make judge the change process. In 2012, the result demonstrated to be a turning point which was facilitated by some strategic approaches hence being market friendly. Liondis (2013) affirmed that during Kelly’s tenure, the company sets up a branch in Singapore to tap in the country economy which is seen to be growing very fast due to increase in business activities and tourism hence more disposable income. The company puts a strong strategy to market entry to ensure smooth and operation successful. Westpac Banking established the advisory board which was to advise on the Asian market and the board included a former minister of the Singaporean government, Lim HweeHua (Liondis, 2013). Obviously, some employees were sent to work in Singapore and the experience was different due to different cultural background. As one of the successful models’, the taste of successful suggests the use of Kotter’s eight-step plan in implementing change at Westpac. Based on the name, the model has eight phases, including creating urgency, creating a strong coalition, developing the vision for change management, communicating the vision, eliminating obstacles, developing wins for short terms, create the change and make the change part of the culture (Brisson-Banks, 2010, p.246). In its early years, the company was faced with various challenges leading to huge losses. In fact, the Westpac Company (2015) stated that in 1992 Westpac registered a loss worth $1.6 billion. However, with a new CEO in 1993, the company showed some improvement. However, the recent years, starting from 2000 have seen banking sectors becoming very competitive as more banks and financial institutions come into the market. Westpac had developed pressure to change and strengthen its position as the top four in the Australian market (Keating, et al., 2008, p.176). The company also had a bad record with customer services as well as falling shares. Looking and the market and its reality, the situation itself created urgency for change. Upon analyzing the market and identifying the crisis, the board of directors understood that the change needed would also be better driven by sound leadership. As a result, White (2014) posited that the board of directors at Westpac poached Gail Kelly from St George Bank. True to their understanding, when Kelly came on board she started the change process straight away. The new CEO Brian Hartzer has also acknowledged the need for change by stating that Kelly has left a clean and clear balance sheet, but they still need to create some sense of urgency if they are to progress (Gluyas, 2015a). This perspective portrays leadership as an essential factor in creating and implementing change in organization. During her time as the head of Westpac, Kelly had created a good coalition with the Board of directors and top level managers in ensuring his change ideas are implemented. Her Coalition and effective rapport with new CEO has made Brian Hartzer knowledgeable and experienced enough to succeed Kelly. Brian Hartzer acknowledges Kelly as claimed that he will continue to implement her ideas, particularly the one focusing on the digital revolution and customer service (Gluyas, 2015a). When Kelly arrived at the Westpac Bank, she took her time to understand the situation and quickly created her vision and communicated to both employees and investors. Her vision revolved around customer focus, digital revolution, cutting the cost of operation and leading the expansion of Westpac in local market and foreign countries (Gluyas, 2015a). Gluyas (2015a) claimed that even though the change took sometimes to be realized, investors had started becoming impatient, she made everybody understand what she wanted for organization. To ensure that no obstacles of change, Kelly laid-off some employees from both St George Bank and Westpac to remain with lean required number for the defined roles in the organizations (Johnston, 2010). Having high numbers with no proper job description creates roles conflicts and organizational conflicts. The CEO rallied the remaining number to realize the desired goal within some short term and long term. One of the short term goals were to improve the stock prices (Durie, 2012). This was a quick win, which would have strengthened the confidence of investors. Within more change process being encouraged, Kelly was seen to be building on the change management, which would steer the company into greater heights. In incorporating the change culture into the system, Kelly continued to talk of objectives and values of change, as well as successful stories where such change has worked. According to Kehoe (2012), she talked of how the co-founder Herb Kelleher of Southwest Airlines uses customer focus strategy to transform the airline company. The extent to which these and other strategies were deployed to create a ‘readiness’ for change at Westpac Creating urgency was an important fact in creating readiness for the organization. Isern & Pung (2007) stated that creating urgency means the consumer needs have changed and these new needs must be met so as to make the company grow as it continues to make profits. A new leader, Gail Kelly was brought into the organization specifically to bring change due to her successful run at St George. Bringing Kelly proved how a leader and the leadership style is important in preparation for change (White, 2014). The leader creates and communicates the vision to other lower level leaders to either buy or reject the idea. Dover (2003, p.243) insisted that the intention for change should also be communicated to employees to rally them to support the change. Without communication of the vision they are bound to resist change, thus delaying or sabotaging the process. Employees normally resist change because of uncertainty, fear of unknown and disruption of their comfort zone (Jarrett, 2004, p.247). For instance, the company was intending to cut back some administration and head office jobs so as to reduce the cost of operation. If this is not communicated earlier, the employees are likely to resist because their job security. During her reign, Kehoe (2012) opined that Kelly recommended carrying of the market research about concerning age, flexibility and diversity. Conducting market research is one of the important aspects of being ready for change because it enables managers to improve or innovate in a certain area of the organization. Market research prepared Westpac for expansion into foreign countries such as Singapore. Conclusion The objective if this report was to analyze how Westpac used Kotter’s eight-step plan to implement change. Westpac is the second largest bank in Australia after National Australia Bank. However, the competition has been increasing each day creating pressure on managers to develop strategies to enable change process. Change also has its challenges that if no proper approach is followed, it is bound to fail. To help reduce the pressure that emerges during change, the report has established that a board of directors first appointed transformative leader who can instill a culture of change into an organization. References Brisson-Banks, C.V. (2010). Managing change and transitions: a comparison of different models and their commonalities. Library Management, 31(4/5), 241 – 252. Crawford, L., & Nahmias, A.H. (2010). Competencies for managing change. International journal of project management, 28(4),405-412. Dover, P.A. (2003). Change agents at work: Lessons from Siemens Nixdorf, Journal of Change Management, 3(3), 243-245. Durie, J. (2012). Westpac to put customers first. The Australian. Gluyas, R. (2015a). Customer focus key to Kelly’s reign at Westpac. The Australian. Gluyas, R. (2015b). Westpac chief vows to lead industry in service, digital growth. The Australian. Gluyas, R. (2012). Gail Kelly is still a force to be reckoned with. The Australian. Isern, J & Pung, C. (2007). Driving Radical Change. The McKinsey Quarterly. Jarrett, M. (2004). Tuning into the emotional drama of change: extending the consultant's Bandwidth. Journal of Change Management 4(3), 247-258. Keating, B., Quazi, A., Kriz, A., & Coltman, T. (2008). In pursuit of a sustainable supply chain: insights from Westpac Banking Corporation. Supply Ch.ain Management: an International Journal 13 (3), 175–179. Kehoe, J. (2012). What I learnt. The Australian Financial Review. Liondis, G. (2013).Westpac boosts Asian capacity in its board. The Australian Financial Review. Westpac Company. (2015). Westpac Company Information. Retrieved from http://www.westpac.com.au/about-westpac/westpac-group/company-overview/our-strategy-vision/ White, A. (2014). Kelly proud of cultural change as she prepares to pass baton. The Australian. Johnston, E. (2010). Westpac to axe admin jobs. The Age. Read More