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Introduction The AEGON Group has 27,000 employees and over 25 million customers worldwide.

Its major markets are in the USA and Netherlands. Since 1994, the UK has become another major and increasingly important market. In 1994 AEGON bought a large stake in Scottish Equitable. Scottish Equitable was a strong brand with a heritage that went back to the 1830s. Since then AEGON's UK business has grown both organically and by acquiring other businesses.

This case study looks at how AEGON has been involved in a culture change programme to create new ways of working for the twenty-first century.

With the changing expectations of customers, organisations constantly need to adapt to remain competitive. When faced with such pressures for change, managers may look for situations, which are familiar to them. This may involve improving the ways in which they operate, but only little by little. This is called incremental change. The danger is that improving little by little might not be enough. They need to adapt to all of the bigger changes in the environment of that business as well. If they don't, what happens is strategic drift

Task 1: Understand the background to organisational strategic change Moran and Brightman,2001:111) defined change management as the process of continually renewing an organisations direction, structure and capabilities to serve the ever changing needs of external and internal customers.As most of the acquired companies kept their existing identities, awareness of AEGON in the UK remained relatively low. AEGON realised that such low levels of awareness could impact on its

ability to achieve its ambitions. Therefore, it needed to combine the global strength of its parent with the experience and reputation of the domestic company brands, like Scottish Equitable, that made up AEGON in the UK.(Business Case Studies) One of the main challenges for decision-makers is to understand the environment in which they are operating. They can then identify key issues which they need to respond to. Understanding these key issues improves decision-taking and reduces uncertainty. Few industries have experienced as many changes in their external environment in recent years as financial services. Task 1.1 Discuss Models of Strategic Change Some of the models of strategic change are : McKINSEY 7-S MODEL: The McKinsey 7-S Model was created by Tom Peters and Robert Waterman whilst they were working for McKinsey & Company in 1978 (12Manager, 2007. According to this model there are seven different factors that are a part of the model:

Shared values Strategy Structure Systems Style Staff Skills

Thomas (1992) Shared values are the centre of the model because it is what the organization believes in and stands for, such as the mission of the company. Strategy represents what the company plans to do react to any changes of its external surroundings (Recklies, 2007). The structure refers to the organizational structure of the company. Systems are the portion of the model that represents "the procedures, processes and routines that characterize how the work should be done". Staff is quite obvious in the fact that it is a proper representation of who is employed by the organization and what they do within the organization (12Manage, 2007). Style signifies the organizational culture and management styles that are utilized within the organization (12Manage, 2007). Skills indicate the abilities and competencies of either the employees or the organization holistically.

LEWINNS CHANGE MANAGEMENT MODEL: This model was developed in early 1950s by Kurt Lewin a psychologiest. Lewin recognized following three stages of change (Syque, 2007), Unfreeze Ttransition Refreeze

The majority of people tends to stay within certain safe zones and is hesitant of change (Syque, 2007). These people tend to become comfortable in this unchanging environment and become uncomfortable when any change occurs, even if it is a minor one. In order to overcome this frozen state, we must initiate an unfreeze period, which is done through motivation (Mind Tools, 2007). Motivation is important in any organization, even when it is not changing. The transition period is when the change

is occurring, which is a voyage and not a step.. The transition period takes time because people do not like change. At the end of the transitional voyage, comes the next stage: refreeze. This is the stage where the company once again becomes stable.

KOTTER'S EIGHT STEP CHANGE MODEL; According to this model there are eight steps that must be followed for successful change. Step One: Increase urgency for change Step Two: Build a team for the change Step Three: Construct the vision Step Four: Communicate Step Five: Empower Step Six: Create short term goals Step Seven: Be persistent Step Eight: Make the change permanent

Christian (2008) The first step is to create urgency for change. This means that we have to convince the employees that this change is necessary for the company to survive. This also means that we must communicate that the change is achievable without any detrimental effects on their jobs. The next step is to build a team for the change, which has to be of some respected employees within the company. The third step is to construct the vision, which will show clear direction to how the change will better the future of the company and their jobs (Rose, 2002). The fourth step is to

communicate this vision. In order for the vision to work it must be fully understand by the employees, which means that it is necessary for the leaders of the change group to follow this vision. The fifth step it to empower the employees to execute the change. It is still important that the management follow the same guidelines as the employees are too. By creating short term goals, we assist the employees to accept the change by showing them progress. Rewards are very important at this step also. The seventh step is about persistence because we should influence more change even after the short term goals are met or the original plan for change will cease and die (Rose, 2002). The final step is to make the change permanent by moving fitting it into the company's culture and practices, such as promotion (Chapman, 2006).

Task 1.2 Evaluate the Relevance of Models of Strategic Change to Organisations in the Economy

The industry has also been characterised by intense competition. AEGON is in competition with organisations which sell directly to consumers and which are better known in the UK. AEGON distributes its products and services to customers mainly through financial advisers. AEGON, as a reputable company, has had to address and overcome these industry-wide problems to remain competitive.

AEGON had historically been successful but government-imposed price controls had reduced profitability. Compared to its competitors, AEGON was not well known by consumers. It had developed good products and services and had a good reputation with distributors, particularly in the area of pensions which were a key strength of Scottish Equitable. However, it was not as well recognised in areas other than

pensions. Often these other areas, such as offshore investment products, were more profitable. If consumers are to invest in a product long term, they need to know more about the organisation they are dealing with. They need to recognise the brand and understand more about the brand valuesthat it represents. As AEGON traded under a number of brand names it was not always easy for financial advisers and consumers to recognise the breadth and depth of the company in the UK.

Task 1.3 Assess the value of using strategic intervention techniques in organisations

With a new Chief Executive (CEO) in place, AEGON underwent a discovery phase. The purpose of this was to find out what it had to do to meet the CEO's goal. This goal was to build 'the best long-term savings and protection business in the UK'. This time of discovery focused on three key questions:

1. What do we stand for in the UK?

2. What do we want to stand for in the UK?

3. What should we be doing about it?

Brand audit

To answer these questions AEGON undertook a brand audit. This audit looked at two aspects:

the company internally how the organisation was positioned externally.

The purpose of the audit was to find out more information about the organisation. This helped AEGON to provide a more informed approach to the decisions that were needed to start the process of change. The audit showed that AEGON was solidly placed within the market. Its staff were known for their considerable expertise, innovation and clarity of communication. The external audit also helped to discover where AEGON was positioned in relation to its competitors. People who were aware of AEGON saw it as being a refreshing and different organisation. However, there was evidence that people were confused about the breadth of what AEGON did because it traded under a number of different company brands.

Task 2.1 Examine the need for strategic change in AEGON The reasons for strategic change at AEGON are listed below Financial restructuring in the United Kingdom. Growth in population and changes in demographic attributes. Cultural diversification in the UK. Changes in social dimensions of the United Kingdom. Evolution of political orientation and policies. Increase in the domestic purchasing power. Institutional and policies neglect regarding the financial products. High competitiveness and consequent challenges.

Deficient Management practices. Inefficiency in processes.

In the personal opinion of the researcher the best choice of change model that should be applicable in case of AEGON UK is Kotters Eight Step Change Model. The researcher believes this is the best choice because it is simple mode. Researcher thinks in this way because it fully prepares the employees of the company before the vision is even created, which means that the actual transition will be much easier in the long run. There are fewer disadvantages to this model than others. Overall it is the best fit for most companies because substantial change is needed for the divisions because it's history. This will also help ease the transition because the division has quite a history compared to the rest of the company, so people are not as set in the ways, as they would be if the division had been around longer. Task 2.2 Assess the factors that are driving the need for strategic change in an organization Before the change consumers were confused about who AEGON was, what it did and how it fitted together. The audit had shown that global scale was important but so was local expertise. In the past, the AEGON brand had not been heavily promoted alongside Scottish Equitable or the other brands that it traded under. The brand strategy helped to reposition the brand within the industry. Now the association with AEGON is much stronger. For example, Scottish Equitable is now AEGON Scottish Equitable - reflecting both local knowledge and global power. All the brands now carry a new common look which is refreshing and different. This, along with the values and behaviours, is helping to make the brand 'refreshingly different'.

The above stated reasons are the few of those that lead management to introduce change in the corporate structure and strategy of AEGON Limited

Dianna (2005) Whenever in the corporate environment deri ving forces and restraining forces are not in equili brium, there is a need for the change. In case of the AEGON UK there were man y deriving forces that caus ed the background of change in AEGON UK. AEGON UK was although was beari ng international reput e but still it didnt had band awareness b y the name of AEGON i n the Unit ed Kingdom. The philosoph y of the fi nanci al servi ces products that were being sold b y AEGON UK or its competitors were quite diffi cult to understand b y the pot ential custom ers. Life expectanc y in the United Kingdom has increased in the recent years so people can expect to be retired f or longer age and simil arl y man y indivi dual never think it worthy to pl an about their retirem ent properl y, on the other hand there was a derive from the government to reduce dependenc y on the stat e in old age so there was a need t o make a social awareness among the people for the benefits of having t he financi al product s sold by the AEGON UK to secure there future because benefit of these investm ents usuall y realised in l ater years. AEGON was not well recognised in the areas other than pensions. Above st ate d reasons are the few of t hose that lead m anagem ent to introduce change i n the corporat e structure and strat egy of the AEGON UK Limit ed.

Task 2.3 Assess the resource implications of the organisations not responding to strategic change Human and other Capacity Requirements The human capacity and skills required to implement the strategy, current and potential sources of these resources. Also, other capacity needs required such as internal systems, management structures, engaged partners and Network NOs and POs, and a supportive legal framework etc. Financial Requirements The funding required implementing the proposed management strategy, current and potential sources of these funds, and the most critical resource and funding gaps. Risk Assessment and Mitigation Strategy What risks exist and how they can be addressed. Estimate of Project Lifespan, Sustainability, and Exit Strategy How long the strategy will stand implemented, after how long and why strategy will require modifications (if feasible to do so), and how it will ensure sustainability of the corporate objective achievements.

Thomas (1992) Strategic Change Management Plan may only be considered complete when these components have been defined, at least in broad terms. As the project moves into change implementation, several of these components are then defined in more detail and tested in reality.

Task 3.1 Develop systems to involve stakeholders in the planning of change at AEGON Karen (2008) Stake holders are the people who are di rectl y affected by the decisions of an entit y. Stake holder may be internal

(managem ent, empl oyees et c.) or external (government, suppliers, banks, medi a, shareholders et c). Different stake holders have different expect ations from the organization. In the process of change, stake holders can be invol ved in a num ber of wa ys suck as;

Involve them in problem solvi ng. Keep them up to dat e of standi ng towards corporate objectives? Take actions on feedback received b y them? Mobilize the correct resources at the ri ght moment to recognize the implem ent ation plan?

In order to invol ve the st ake holders to the process of change the new chief executive officer of AEGON carri ed out the following actions; Simplification of Fi nanci al Servi ces; for the purpose of involving the customers to the process of change the Chief Executive Officer of AEGON adopted a customer focused approach. The CEO simplified the ever complex financi al services in terms of their understandi ng and it was now made ver y simple to underst and. Now the customers know that what the y are investing into and what return their investment is expected to yiel d at the end of the contract. Earlier

customers

have

alwa ys

been

confused

bet ween

the

complex

cal culations. Now t he custom ers are happ y because the y dont need an y financial int erpret er to understand the ins and out s of the products offered b y the AEGON. Workforce Development; An -ot her ver y important stake hol der of the organization is the emplo yees. Mark (2005) These are act uall y the peopl e who are practicall y responsibl e for to m ake the change process successful or not . Before impl ementing the change the n ew CEO took the empl o yees in confidence and bri ef t hem about the fact that what AEGON st ands today and what AEGON wants to stand in t he future and he also address the forces reasoning this change. Next step is to devel op the new ski lled requi red t o impleme nt the change, the CEO introduced job rotat ion which involves progression from one job to the other job. Hence it provided individual emplo yees with a coherent career pat h. CEO also arranged a Management Development Programme in coll aboration with a leadi ng managem ent college for the training of the workforce. Creati ng Disti nct Market Place; To refresh the brand i dentit y of AEGON into the minds of the people the CEO carri ed out an external promotional campaign to hi ghli ght the relationship bet ween the locall y famous Scot tish Equitable and AEGON. Also the CEO spoke to the medi a stating the reasons for the change and how the change will be useful for the stakehol ders.

Task 3.2 Develop a change management strategy with stakeholders at AEGON

Stakeholder management is critical to the success of introducing change in the organization .The more people are being affected by change, the more likely it is that your actions will impact people who have power and influence over your projects. These people could be strong supporters of your work or they could block it. Harriet (2005) Stakeholder Management Strategy is an important discipline that successful people use to win support from others. It helps them ensure that their projects succeed where others fail. Rob (2008) Stakeholder Analysis is the technique used to identify the key people who have to be won over. You then use Stakeholder Planning to build the support that helps you succeed. The benefits of using a stakeholder-based approach are that:

The opinions of the most powerful stakeholders to shape change implementation at an early stage. Not only does this make it more likely that they will support you, their input can also improve the quality of your project Gaining support from powerful stakeholders can help you to win more resources this makes it more likely that your projects will be successful By communicating with stakeholders early and frequently, you can ensure that they fully understand what you are doing and understand the benefits of your project this means they can support you actively when necessary

By anticipating what people's reaction to your project may be, and build into your plan the actions that will win people's support

Task 3.3 Evaluate the systems used to involve stakeholders in the planning of change

The changes affected the organisation both internally and externally. Within the organisation, they influenced not only how people behaved but also how they communicated. The organisation has become more focused on the customer. The emphasis is on making information clearer for the customer to understand and the company easier to do business with. To help embed the values and behaviours, AEGON established a new relationship with Shirley Robertson, the famous yachtswoman and the only British female athlete to have won gold medals at consecutive Olympic Games. By associating AEGON with an individual who embodies similar values, it was able to bring the values and behaviours to life for staff. However, AEGON had to develop the brand and its reputation. It did this is a number of ways:

External promotional campaigns emphasised the relationship between Scottish Equitable and AEGON. This helped to reinforce the local knowledge and the global power of AEGON in the UK.

The CEO talked to the media about the need for change. The refreshing of the brand internally and externally resulted in strong positive feedback.

AEGON has launched new and innovative products. For example, the 5 for Life annuity has helped to change the way in which consumers can look at their retirement income. It provides more certainty about levels of income for

the consumer, with AEGON providing the levels of return promised and being responsible for any risks associated with doing so.

Today the AEGON brand has a position from which it is influencing the financial services industry. It has posted record results with significant growth in underlying earnings. It has also increased its new business across a mix of profitable products and services, reflecting its continued strength.

Task 3.4 Create a strategy for managing resistance to change at AEGON

The researcher has developed following strategy for managing resistance to change in the AEGON. There will be a workflow process in order to achieve results for mutual benefits for employees and organization. There will be an Authority Process in order to direct behaviour in the interests of the organization and its participants. There would be a Reward and Penalty Process to induce people to behave in a way required by the interests of the organization and its participants and / or to behave in a way making associated activity possible. There will be a Perpetuation Process to maintain, replenish, and make adequate the quantity and quality of social and natural resources utilized by the organization and its participants. There must be an Identification Process to develop a concept of the wholeness, uniqueness and significance of the organization. This is usually accompanied

by efforts to select and define clearly understood emotionally toned symbols, concepts, or other such factors which will help individual participants identify the uniqueness of the organization as a whole, which in turn automatically helps to define the uniqueness of the organization in the larger environment in which it is embedded. There will be a communication process to provide for the exchange of information, ideas, feelings and values etc utilized in all activities to the stake holders. There must be an evaluation process which establishes criteria for and defines levels of utility and value for people, materials, ideas, and activities and which rates them and allocates them to these levels. Task 4.1 Develop appropriate models for change at AEGON The CEO conducted a SWOT anal ysis of the fi rm. After getting the situation the CEO decided to devel op a new behavioural framework for the st aff which was known as 8 behavi ours fram ework and also arranged manageri al traini ng for the workforce. The CEO further addressed to the stakeholders of the organiz ation to communicat e his vision to them b y simplif ying the financi al servi ces, devel oping a workforce and arranging a brand awareness campai gn. The CEO also spoke to the media about this change process and the reasons for t he change. Hence model i mplement e d b y the CEO of AEGON UK brought about considerable positive change to the

organization and gave it a new li ne of direction towards the desired goals and objectives. Task 4.2 Plan to Implement a model for change at AEGON The pl an for the change was impl ement ed into the vari ous st eps such as dis cover y phase t o anal yze where the AEGON is ri ght now, where it wants to be and what actions are requi red to meet the obj ectives set by the Chief Execut ive Officer t o become the best long t erm saving and protection busi ness into t he United Kingdom. Discover y phase reveal ed the reasons for changes and weaknesses and strengt hs of the organization. Aft er the discover y phase the next step was t o involve the appropri ate stake holders into t he process of change. The chi ef executive officer i nvolved vari ous stakeholders in different effective manner as discussed previousl y. The CEO furt her redeveloped the organizational behavioural fram ework and arranged the t raini ng of the staff members. The out com es of t he efforts m ade by the CEO were extremel y encouraging and rewarding for the compan y. Before the change there was confusion among t he peopl e about t he recognition of AEGON but aft er the heav y promotion of the brand AEGON with Scottish Equitabl e creat ed a more reliabl e image of the AEGON into the minds of the peopl e. Further t o that the brand carri ed a new more powerful and presti gi ous look as AEGON S cottish -Equit able. The behaviour of the empl o yees changed altoget her, now the y behave with more customer focused approach. Now the emplo yees are concern to

provide useful and rel evant servi ces to their existing and potential customers and the organization is alwa ys doing its level best to do what is reall y important t o their customers. B y the change into the structure of AEGON now the custom ers are being offered more choices of services. AEGON launched new and ground -breaki ng products like the 5 for Li fe annuit y has facilitated to change the wa y in whi ch consum ers can look at their reti rem ent i ncom e. AEGON providing the levels of return promised and being responsibl e for an y risks associat ed wit h doing so it provides more cert aint y about levels of income for the consumer. In s hort as the resul t of the change implement b y the CEO of AEGON the compan y r ebuil t its brand reputat ion, becam e more customer focus ed, started to provide more innovative products and became more popular am ong the consum ers and ultimatel y the business has grown to a gi gantic extent. In order to become more customers focused the ne w Chief Executive Offi cer decided to develop a new organi zational behaviour fram ework to support the brand values of AEGON. Behavioural framework is the structured pre -defi ned codes of behaviour how the i ndividuals

working within the organization are suppo se to behave among themselves and to the peopl e outside the organization. Presence of the behavioural framework gives rise to the similar behavioural and ethical values of all the individuals at all levels wit h in the organizational . Behavioural framework developed b y the AEGON was mainl y focusi ng 8 behavi oural values, which are;

THINK CUSTOMER ; EMBRAC E CHANGE; ENCOUR AGE EXC ELLENC E; ACT W ITH INTEGR ITY; DEC IS IVE AC TIONS; WORK TOGETHER; LEARN & GROW; RELATE & COMMUNIC ATE

Task 4.3 Devel op appropriate meas u res to monitor progress Monitoring progress of change process is important as it measures the activities and Performances related to it. At AEGON this progress is monitored by checking if the
Was the plan accepted? What problems were encountered?

How was it necessary to modify the strategy?


What techniques were most effective?

As the part of their strat egy AEGON also undertook an audi t to look at the two aspects which were the internal position of the compan y and how AEGON was positioned internall y into the market

respectivel y. The audit reveal ed that AEGON was fi rml y positioned within the m arket. It s workforce was known for their considerabl e expertise, innovation and clarit y of communicati on. The external

audit also helped to determine where AEGON was placed i n relation to its competitors. This audit provided a ver y important visi on to the decisions that were needed to initiat e the change process.

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