Change Management Effected in a Local Insurance Company - Case Study Example

CHANGE MANAGEMENT Change Management Change management refers to the thoughtful planning, sensitive implementation, as well as the consultation and involvement of all the parties responsible for affecting changes in an organization. Change management entails offering and implementing technologies to handle changes in the business environment in order for an organization to yield from the changing opportunities (Kotter & Cohen, 2002). Forcing changes on people normally cause problems since it is natural for people to resist anything imposed on them. Therefore, change management should be measurable, achievable and realistic. This is because these tenets make managing personal change probable. Before commencing an organizational change; individuals should ask questions such as; what is the organization going to achieve with the change? How and why will they discern that the change is successful? Who will be affected by the change, and what will be their reaction? To what extent can the change be effected with help; and in what areas should assistance be sought? These questions guide the individual effecting change since it makes him or her understand what is being done. This paper shall seek to explain the change management effected in a local insurance company; so that it could be saved from imminent collapse after going bankrupt. The eight stages of change management, as well as three tools of needs assessment, will be used to analyze the change management initiative. Since the local insurance company needs a powerful restructuring plan to save it from imminent collapse, it should consider downsizing some of the high level executive positions. Additionally, it should thin down its organizational chart by laying-off some of the employees conducting programs that are no longer aimed at bringing the company back to its feet. Laying-off workers who have stood by the company for the many years is not an easy task; therefore, it should be done with extreme caution. First and foremost, the underperformers and the underachievers should be the ones to face the axe. This is because they add little value to the company and their dismissal would do the company good. Secondly, while downsizing some of the high level executive positions, it should be noted that some roles done by one executive duplicate to another executive. Therefore, such situations should allow the merging up of two different portfolios that perform almost similar roles. In order to make the change management effective, it is necessary to use Kotter’s eight steps of efficacious change management. Kotter’s model is extremely essential in managing and understanding change. This is because every stage acknowledges the vital principles that relate to the people’s response, as well as the approach to change. Additionally, it shows how individuals see, feel and eventually change. The first step involves increasing urgency. This entails inspiring people to move and make relevant and real objectives. Employees of the insurance company should be made to understand that the company is in poor shape, and their effort and hard work is needed in order for the company to rise again (Kotter & Cohen, 2002). The remaining dedicated and committed employees should be made to set goals which they should tirelessly work towards achieving. The company executives should also make everyone understand that the rise or collapse of the company lies in their hands. In this way, every member of the company would take the issue passionately so as to rise and fight for the company and bring it back to its former glory. The second step involves building up a team to affect the change initiative. In this step, the company executive should get the right people who have the right emotional commitment, as well as the mix of skills and knowledge (Kotter & Cohen, 2002). Since the company is performing dismally, it would be extremely disastrous for the company to employ armatures or fresh individual from college to key positions in the company. This is because they would face challenges that they would not know how to handle; thus, sinking the insurance company further into its problems. On the hand, the lack of resources needed to do certain jobs within the insurance company calls for individuals with emotional commitment. This is because they are the only people who can face challenges and still perform efficiently in their duties. Others would be frustrated and quit, or they would fail to fulfill their responsibilities effectively. The third step involves getting the vision right. In this step, the executive and high level employees should get the whole team to establish a simple strategy and vision. Besides that, they should focus on creative and emotional aspects needed to drive efficiency and service. Motivating the employees and the entire team to strive towards ensuring that the insurance company does not collapse should be the basis of their talks (Kotter & Cohen, 2002). The employees should be given room to come up with innovative ideas that can salvage the company from imminent collapse. In this way, the company’s executive would have wide-ranging ideas to choose. On the other hand, the company’s CEO should be made to understand that accommodating criticism from his senior managers could also help the company come up. This is because the managers are well educated individuals and their positive criticisms could be the solution to the company’s problem. The fourth step involves communication. In this step, several people should be involved in the communication process. It is worth noting that only the essentials should be communicated in a manner that appeals and responds to the needs of the people. Technology can be used to assist in this step. For instance, emails and mobile phones can be used to inform employees of any progress or problem the company is facing at any given time. If there is any urgent information that needs to be passed around, effective communication will be of help. It also through communication that the progress the company is making will be monitored. The fifth step involves empowerment. In this step, all obstacles that may hinder constructive feedback and support from leaders are removed. Additionally, progress and achievements are rewarded. In order to ensure that the company rises quickly, the top management should recognize the efforts of top employees (Kotter & Cohen, 2002). For instance, employees who do well in their respective departments should be mentioned during departmental meetings and even rewarded. This would motivate them to continue working hard. At the same time, other employees would be motivated to work extra hard so as to receive the awards. In this way, every employee would be committed towards achieving the company’s mission and goals; thus, saving it from collapsing. The sixth step entails creating short-term wins. In this stage, aims that are easily achieved should be set. Additionally, the aims should be set in manageable bit-size chunks. This will ensure that they are completed before coming up with new ones. The top management of the insurance company should not exert lots of pressure on the employees by setting aims that are difficult to achieve to achieve. This is because the employees’ failure to achieve the goals would demoralize them. Moreover, they can believe that their efforts are fruitless, and there is no way they are going to salvage the company. The seventh step involves building on change. This stage involves fostering and encouraging determination and perseverance. The employees should be able to see the ongoing change. Moreover, they should be encouraged to report the ongoing progress (Kotter & Cohen, 2002). The top management of the insurance company should highlight the areas that have registered achievement, as well as areas that they hope to achieve. In this way, the progress would be shared among the whole team so as to restore hopes that their efforts are yielding fruits. The eighth step involves making the change stick or embracing the new culture. This involves reinforcing the value of the prosperous change through promotion and employing of new skilled and experienced leaders. This is essential since it will facilitate the weaving of the change into the company’s culture. The insurance company should make all its employees aware of the change and the importance of upholding it. Before implementing a change initiative; an individual should first conduct a needs assessment. This is because the plan chosen should address the needs of the organizations and individuals in order for the change to be effective. Therefore, change management tools should be used while assessing the change management needs. The five tools comprise; Change Readiness Audit, Stakeholder Analysis, Commitment Assessment, Leadership Alignment Assessment, and Strengths, Weaknesses, Opportunities, Threats (SWOT) Analysis (Nelson & Aaron, 2005). However, for the insurance company, three tools will be used to assess the needs of the change initiative. They include; Stakeholder Analysis, Commitment Assessment, and Strengths, Weaknesses, Opportunities, Threats (SWOT) Analysis. In the Stakeholder Analysis, the individuals who are essential for the successful change are defined and assessed. This tool is essential in change management since it will help the insurance company identify the level of support that the stakeholders can provide to affect change. Additionally, it gives an opening for the Communication Plan, as well as additional information for the successful implementation of the change (Nelson & Aaron, 2005). While conducting the Stakeholder Analysis, one should have a broader idea of the stakeholders and consider those inside and outside the organization. Consideration should also be made on those who support the change or not, as well as those whose support and consent is mandatory for implementation of the change strategy. In this way, an individual will know how to go about the change process. For instance, change in the insurance company at an early stage when the company had not gone into bankruptcy was possible. However, the CEO and some of the top executives, whose decision was mandatory, made the change impossible. The CEO of the company failed to heed the advice of the long serving leaders of the company regarding some of the company’s vision and implementation plans. On the other hand, the top level executives refused to cut their perks since they wanted to maintain an image to the public. If the two parties (stakeholders) could have accepted the change at an early stage, the company could not have gone bankrupt and face imminent closure. In the Commitment Assessment, individuals show their level of commitment to change. Moreover, the assessment outlines what people need to help them develop powerful commitment to the change process (Nelson & Aaron, 2005). While conducting a Commitment Assessment, it advisable to give them copies of the assessment to complete. This is because using the chart form where employees post their responses can be misleading. This can be caused by employees’ following other people’s opinions. Commitment Assessment gives the stakeholders position on the change process; thus, a seventy or eighty percent is enough for the change process to be successful. The collapsing insurance company should conduct a Commitment Assessment so that it can determine whether the stakeholders have given up on the company. It would be extremely difficult to salvage the company if the insurance company’s Commitment Assessment would produce a percentage lower than fifty. That would mean that the stakeholders do not have hopes in effecting the change that would revive the company. Therefore, they would not put much effort in their work. In SWOT Analysis, the Strengths, Weakness, Opportunities and Threats of a business entity are analyzed (Nelson & Aaron, 2005). In terms of its Strengths, the insurance company had experienced a steady growth within the insurance industry after seven years of its existence. Additionally, it extended itself into markets into areas that were not of it expertise. This showed that it had a competitive advantage over rival companies. On the other hand, the insurance company had Weaknesses that put it at a disadvantage when compared to others. For instance, its top management executives were not agreeing on key decisions that influenced various policies of the company. The workers also lacked the motivation and resources to do their work; thus, they became frustrated and left. The decline of the employer turn-over rate to 72% within six months was also a major weakness that the insurance company faced. In terms of Opportunities, the insurance company was likely to retain some of its loyal customers. Those who benefitted from the gifts the company offered during its glorious days are likely to stand by the company in its troublesome moments. Lastly, the insurance company was likely to face Threats from other small thriving insurance companies that are new in the market. This is attributed to the fact that people often associate new things with growth, and since the insurance company had failed in the eyes of the public; competing with these new entrants in the market would be extremely difficult. In conclusion, change management is an essential process for survival of organizations. The insurance company could still reclaim its lost glory if the stakeholders join hands together and embrace the eight stages of change management. Additionally, using the needs assessment tools would also help it a great deal. References Kotter, J. & Cohen, D. (2002). The Heart of Change: Real-Life Stories of How People Change Their Organizations. Boston, MA: Harvard Business Review Press Nelson, K. & Aaron, S. (2005). The Change Management Pocket Guide: Tools for Managing Change. Cincinnati: Change Guides LLC. Read More