Assignment - Managing Organizational Change

Thursday, December 15, 2011 at 7:25PM | Adrian Keys | Post a Comment | Share

In approaching this post, the organisation being considered will be looked at briefly. This will be
followed by, in this case, recent external factors triggering profound change in the said
organisation. (Change is being taken to mean making things different). Technological change
will be the main focus for assignment although other areas of change will be touched on briefly.

The organisation being considered is a merchant bank - Manufacturers Merchant Bank (MMB)
as it operates in the current year 1999. In the Jamaican context, merchant banks are not typically
providers of long term funding like their international counterparts but , as is today, serve clients
in such areas as Funds Management, Foreign Exchange Trading services, Corporate Finance and
on a much reduced scale Fixed Deposits (Deposit-taking) and Credit Services (On-lending) .
There are over twenty merchant banks in Jamaica competing in many ways with commercial
banks and investment houses.

Change at the bank has been triggered by unstable economic conditions and new banking
regulations which have virtually revolutionised merchant banking as we know it over the last
three to four years. These economic conditions in the main include high levels of inflation,
currency devaluation, and prolonged periods of high interest rates. All these have made for the
bank’s credit clients being unable to meet their monthly obligations. Consequently the result has
been huge loan write-offs and unthinkable losses. Needless to say investor confidence is at an all
time low. To compound problems bankers have found that with the overall poor state of the
economy there was little hope of successfully realising collateral such as motor cars and real
estate used to secure credit facilities extended to clients.

In addition to these adverse economic conditions the Bank of Jamaica (Jamaica’s Central Bank)
in attempting to control money supply increased cash reserve requirements and by extension
liquid assets reserve requirements with the effect of almost making the business of Deposit-
taking and On-lending (the bank’s core business at the time) extinct. The effect was that banks
in order to cover interest costs had to charging high interest rates on loans which could not be
maintained by borrowers. In addition, at just about the same time clients became aggressive in
seeking alternate investment instruments which did not attract income tax at source like Fixed
Deposits - the main investment instrument of choice up to that point...

MMB’s response to these external forces was to radically shift the business focus to ensure
survival in the harsh economic climate. The new focus was more on Corporate Finance, inter-
mediation in accepting and placing funds (Funds Management) and Foreign Exchange Trading
services. The move away from Deposit-taking and On-lending, in particular, meant the bank
could, by providing inter-mediation services pass funds on to borrowers at a much reduced cost
and at the same free itself from risk so inherent in its previous business focus.

(A) Describe a recent change in your organisation, or a specific part of it.

With the profound impact of the external forces (“triggers”) it meant widespread change was
necessary in order to ensure survival. This process started with the removal of the then Managing
Director and the installation of new, younger and more vibrant Chief Officer. As the “change
agent” he set about putting in motion the process of renewal immediately. Almost every aspect
of the banks operations required change. In the context of Harold J. Leavitt’s structure of
organisational change, MMB was required to change many of its internal processes- its tasks, a
substantial portion of managers and employees - its people, lines of authority and
unit/department functions - its structure and its techniques and tools - its technology. These
changes of course would have been easy to imagine given the interlocking nature of these
dimensions.

As was mentioned, a more detailed look will be taken at technology as the force of change at
MMB. It is on this force that the second part of the assignment will be centered. The section ends
with a brief look at the kinds of resistance to the change coming from staff.

Trading requires a structure that facilitates speedy and efficiency processing. Typically spreads
on trading volumes are low so that it is important to be able to process many transactions with
the minimum of ease. As such the entire technological structure of the bank which was built
around the slower paced business of Deposit-taking and On-lending had to be completely
overhauled.

This process involved a detailed look at existing hardware and software and in-house
competence. An assessment was the made of kinds of transactions and services that would be
provided going forward and the kinds of systems that would need to be in place for support. The
concept of the structure in mind was to set up an integrated system that would essentially require
a one time input of deal/transaction information. From this point all approvals by Unit Heads,
Division Heads would have been effected on the system and the cheque cutting, cashiering and
documentation functions facilitated with minimum additional input of information to the system.
This would significantly cut the processing time required in any transaction.

The assessment phase which required considerable participation and feedback from staff did not
have the desired effect. Management none-the-less thought that the change was all important and
inevitable to keep up with the new business focus and competition that had become more intense
with passing time. A steering committee which included only members of the management team
was set up to oversee, develop, test and implement the new technological platform. The mandate
of the committee was quite clear: Develop an integrated software programme to effectively
manage the banks new and chosen core products and services, and facilitate a process of
reorientation while training staff to become masters of the new approach.

As mentioned there was little feedback from lower level staff especially those who had been
employed to the bank for a long time. In one on one situations staff expressed that with all the
foreseeable technological changes the need for certain job functions would be made redundant
with the con-committant loss of employment. Others felt that although they could see the
benefits they were uncertain as to how they would fit in the new structure.
Arthur Bedian’s four common causes of resistance to change (parochial self interest, low
tolerance to change, contradictory assessments and misunderstanding and lack of trust) sums up
the mood at MMB at the time.

(B) To what extent was this change designed to achieve empowerment within the
organisation? Identify the interventionist techniques used and assess the success/failure of
the change to achieve greater empowerment.

As was mentioned, technological change will be the focal point especially with answering this
second part of the assignment in mind. Empowerment is taken here to mean putting workers in
charge of what they do: In other words, less supervision being required by managers with
workers being allowed to determine processes, make decisions, etceteras. In this section the
extent to which the technological change was designed to empower workers will be analysed.

Prior to the technological changes there existed very identifiable problems with the structure
(physical layout) of the bank. The bank was split into two floors with units/departments with
separate filing systems located in areas which did not make for good work flow.

Inevitably pockets of information developed and was compounded by staff who felt they had
territory to protect especially if they in any way felt threatened. Certain individuals ended with
key information pertaining to certain transactions which caused a major problem in continuity
especially when staff decided to move on.

All this resulted in problems in communicating with clients on a day-to-day basis if certain staff
were unavailable. Staff at the operating level often times did not have all the information and as
such senior managers had to be constantly consulted on sorting workflow and other problems
and in making decisions at all levels. Senior managers felt that with the fragmentation of
information and constant errors, close supervision was a necessity.

The technological change while not giving total control certainly was designed, among other
things, to put staff in better control of their day to day functions. Empowerment was targeted
trough a new technological structure that would allow:

The one time capture of information to ensure that staff had full and correct information at
their fingertips to pass on to clients;

Quick and easy generation of reports that provide key information for use in analysis and
forecasting and decision making;

Flexible system design that allow for suggestions from staff to be incorporated in system
design;

Simple speedily and efficiently processing of transactions meant to minimise errors and lessen
close supervision;
Decision making on full and accurate information hence lessening the chance of serious
mistakes.

In addition with speedy processing, staff could complete tasks on time hence reducing the
need for long work hours and overtime work;

Reports could processed without any great effort and delivered in a timely fashion. 

In embarking on the technological revolution at the bank it is fair to say that there was no
systematic approach from management as to which areas in the bank to intervene and in what
order to move the process forward. The approach was more to select areas that obviously needed
changing. With more knowledge in hand the intervention process used by management to move
the process forward is similar to those described under Selfridge and Sokolik’s Interventionist
Strategies. A closer look shows that it is those strategies aimed more at structure and tasks that
were used and less of those targeted at individuals and their emotional state and groups and their
inter-personal relationships.

At this stage of the assignment a fit between the various areas of focus use at MMB in
stimulating change and those identified by the Interventionist strategies of organisational change
and development is made. The identifiable strategies include:

Organisational Structure

Prior to the change process there was no cohesive approach to the technology issue. The function
was performed within the Operations Unit and the emphasis was on support as opposed to
providing solutions. The intervention here involved the formation of an Information and
Technology Unit staffed by two. The function was removed from the umbrella of operations and
given the mandate to assess, recommend, develop and implement technology that would assist
the bank in delivering its products and services.

Functional Policies and Practices

In order to ensure that projects that were apart of change process completed on time and within
the organisation’s means, the Information and Technology Unit like the strategic units was given
a budget within which it was required to work. In addition, deadlines were developed for the
development ad implementation of projects. These were assessed from time-to-time in the
monthly steering committee meetings and certainly, where possible, in the normal appraisal
process.

Management Development

Here the intervention was based on the fact that additional training and development was
necessary for senior managers especially for those who had been with the organisation for a long
time. It was felt that with this knowledge manager could better communicate the overall dream
and benefits of implementing the new technology and train and develop subordinates more
effectively. The training included on the job training arranged by the Information and
Technology Unit and relevant training seminars from external sources.

Job Enrichment

With the new technology available and through the electronic mail system staff was encouraged
to provide feedback on work flow and to suggest ways in which things cold be done more
efficiently. One useful innovation was the “problem log” introduced by the Information and
Technology Unit which documented user problems and provided a useful resource for
enhancements to the system. In addition through the forum of meetings, the user could outline
problems and make meaningful suggestions as to how their tasks could be done more efficiently.
The in-house programmer was able to document useful suggestions for use in future system
design.

Inter-group Behaviour

By consolidating all work groups on one floor an attempt was made to foster greater
understanding of tasks and work-flows. The fully integrated system forced workers to see how
important their input was to the eventual delivery of products and services. Also, with the
information available for everyone to see staff would not have the need to protect territory and
hence less tension would facilitate greater teamwork.

At this stage the success or failure of the technological change will be assessed in relation to
empowering staff. J. Kotter and L. Schlesinger’s model of organisational change and
development will be used in assessing this success or failure.

As mentioned before empowerment puts people in charge of what they do. The technological
change described has had mixed success in empowering staff. Undoubtedly there has been
marked improvements in transaction flow, speed, efficiency and greater transparency of
information. However while some staff gravitated to the technological dream from the very
outset and are now quite at home others have been slow to accept the inevitable winds of change.

With the technological change still very much in progress and with workers being made
redundant as the automation process progressed there are workers who are still concerned about
the reduced content of their jobs, job security and economic survivability if the worse was to
happen.

In the context of Kotter and Schlesinger and in retrospect the technological change process at
MMB could have been far more effective with better education and communication. In hindsight
the technological dream was never put in proper context and articulated to staff in a clear and
concise manner. Neither was it reinforced enough. The kind of counselling mentioned by Kotter
and Schlesinger was never thought of and not enough effort put into allaying fears of workers
about their job insecurities.

Kotters and Schlesinger,s second dimension - “participation and involvement” - was never a
priority until recent times. Management always thought that the change through technology was
necessary and inevitable because of the external forces and was always prepared to proceed with
or without the support and acceptance of lower level staff. This in part explains some of the
resistance mentioned earlier. This lack of participation and involvement has come back to haunt
MMB as without this valuable input hours of development work has had be discarded or was not
implementation worthy because of the lack of functionality.

With facilitation and support MMB’s management ignored any kind of counselling programme
that could have helped workers overcome their fears to change. The preoccupation was to press
ahead with the change process with no serious attempts made to address concerns whether at the
group or group level.

In a couple of instances apart from the natural process of redundancy, workers were given
“marching orders” out of their refusal and reluctance to make necessary adjustments to facilitate
change process. This further contributed to existing jitters about the changing taking place. This
embodied the explicit and implicit coercion Kotter and Schlesinger spoke about.

Kurt Lewin

In the context of Lewin’s model of organisational change and development, the mixed results of
the technological change process in empowering workers at MMB are better understood.
According to Lewin the initial phase in any change process is the unfreezing the existing status
quo.

This may involve the use of what lewin calls driving forces which are forces that direct
behaviour away from the status quo. In MMB’s case while computer literate workers would have
been more secure in their jobs there was no incentive put in place to encourage staff to take on
external skills courses in computer technology.

Further Lewin argued management could look at reducing restraining forces. These are forces
that hinder movement away from the status quo. This by using counselling to set the fears of
workers aside. Again as mentioned this was not utilised by MMB.

The use of either of these forces or a combination of both it seems certainly would not have done
any harm to the process of empowerment being approached through technological change.

Action Research

While this model in general would not have been quite suitable to the process of change at MMB
it is also apparent that a similar structured approach trough diagnosis, analysis feedback, action
and evaluation again could have added to the credibility of the process. With this kind of
approach, Operations staff would have been given a greater chance of participating, that is, in
identifying problems and their root causes and also in providing invaluable feedback on the
process of change. MMB could well be guided by such a systematic approach in the future.

Conclusion
The assignment begun with a description of the external forces - adverse economic conditions
and central bank regulations which triggered profound change in the various dimensions of the
bank. It can be asserted that with these powerful forces, change was inevitable and would affect
the length and breadth of the bank as illustrated by Leavitts interactive model. The focus of the
assignment, however, was technological change and the approach to the process was described.

In the second part of the assignment, it was shown how the process of technological change was
designed to achieve empowerment and an attempt to fit the Interventionist strategies to the
process was made. It was shown that only a few of the identifiable levels were used by MMB’s
management. The approach was very unstructured. With the strength of the external triggers,
only change was certain, the how and when was never answered in a systematic way.

Finally various models of organisational change was used to show the extent of the
success/failure of the change top empower staff. It was shown that the change process was still
ongoing and that it had achieved some measure of success. However by fitting the process to
approaches to change management as suggested by the different models, it is obvious that a
greater level of success could have been achieved with less trauma to the system. For the
remainder of the way there is no doubt that what has been learnt from these approaches could be
gainfully applied to managing change at the bank.