GSGM7223 MANAGING ORGANISATION

Case Study (20%)

Due: Week 3

MYBANK: A CASE STUDY ON ORGANIZATIONAL CHANGE

The bottom-up approach to change
During the 1990s, one of the senior executives of Mybank became convinced of the benefits of a
quality improvement program for reducing costs in forming quality improvement teams to identify
and rectify inefficient work systems through the elimination of waste and rework. The attraction of
such an initiative also stemmed from its potential to achieve cost reduction in-house, using existing
staff to improve quality and customer service as well as offering the organization an ongoing
methodology for continuous improvement.
In embarking on change, the implementation strategy adopted was as follows: an outside
consultant was used to introduce the philosophy and tools of the change program to senior and
middle managers in a series of workshops. Once familiar with the concepts and principles, these
managers were then expected to encourage their staff to form quality improvement teams to
solve specific work problems identified by either the general staff or managers. The involvement
of general staff was seen as a crucial issue: operational staff were seen to be intimately
acquainted with their own work processes and thus ideally placed to recognise existing
inefficiencies and to make recommendations to rectify them. In order to assist in the
implementation process, a quality support group of two people was established to provide
training and facilitation for general staff involved in quality improvement projects. In time, it was
hoped, the philosophy and methodology of continuous improvement would become an integral
part of everybody’s job. This model relied on a bottom-up approach based on operative staff
involvement with support from management. As one manager expressed it ‘Management’s role
was to support and to encourage it rather than be involved in it.’ As It turned out, this initiative
was only fully implemented and operationalised in a limited number of areas (mainly in
departments with routinised administrative tasks).
Participation in quality improvement teams was voluntary and comprised five to ten intra-
department general staff and a quality coordinator from the quality support department. The role
of the quality coordinator was to act as a facilitator, mediator and trainer for the team. Once a
problem had been identified, the team would consult with any persons or departments that either
used the output to the work system or supplied input into the system. The team would then identify
possible inefficiencies, analyze these may occur and then make recommendations to
management as to how the system could be improved. Interestingly, the views of general staff
about the new initiative were polarized: they either hated it or loved it. Those that hated it either
did not want to be involved, did not understand it, or were simply happy just to get on with their
own work. As a supervisor put it: ‘They do not want to get involved. They just want to do their 40
hours.’
Employees who embraced the initiative was particularly excited about being given the
opportunity to contribute to the construction of their own work organization. As one staff member
recalled: ‘I have never worked in an organization (until this one) that wanted to hear the input of
……those down the bottom.’ Other staff expressed initial trepidation but once involved became
active supporters: ‘it was absolutely terrific, it improved our system there, 100 percent, 150 percent.
It’s great!’. In part, the enthusiasm of some employees can be explained by the material
improvement in their working lives:
I was working overtime, at times, back until 7.30, 8.00 o’clock at night
and he (the manager) told me I had to take three days off all my work,
 forget about it totally and go into this room and do this thing. Oh my God,
I am going to be here till doomsday, trying to fix these things up. It took
three days, and it was great. It made such a difference that we stopped
doing overtime. It was amazing. Helped us out tremendously.

Indeed, so successful were some projects that operations or procedures that had taken weeks
were reduced to a matter of days. However, even among the most ardent supporters, enthusiasm
soon waned. This was due to two factors. First, employees were still expected to complete all their
other tasks in addition to the work required by the change projects. Consequently, improvement
meetings that lasted one or two hours could result in quantitative work overload. Even managers
who were supportive recognised this problem, as one stated: ‘The resistance you get is “Hey!
When do I have to do this by, I am flat strapped now!” The second factor that caused
disillusionment among employees was that management rarely accepted their
recommendations for improvements. This was seen to be particularly frustrating given the time,
effort and enthusiasm many staff had put into projects. As one employee explained:

I was leading a project ….. looking at our relationship with builders and
under construction loans in general. We saw it through to completion
: we had some recommendations that we thought were good ones. Some
of them were put in place but the major ones were not. Upper levels of
senior management in the bank decided that it was not the way to go,
and we were not going to do that. That was really running into a brick wall.

The non-linear process of change

The failure for the change initiative to be adopted in many areas of the organization was due to
a number of reasons. The most important was the reluctance of senior and middle managers to
actively support the change. They were skeptical about the initiative and felt that it was better
suited to the manufacturing sector rather than financial service operations (one more open-
minded manager did concede that the initiative could have some use in administrative areas of
the organization). As one manager expressed: ‘We are more administrative than a lot of other
areas and therefore responded to it a little bit better than other parts of the branch.’ Many
managers were of the opinion that their departments were already over-worked and simply could
not afford to allow their staff to take time off to become involved in this change initiative. For
some, the acceptance of change implicitly at least, that managers recognised that their
departments were currently inefficient and improvements were possible. Interestingly, one of the
most common reasons expressed for the lack of adoption was the lack of commitment from top
management. As one person put it:

They (management) agree that they understand the concept, that they felt
It is necessary and they see the advantages, but when it comes to the role-
modelling or leading or doing, they back away at a million miles an hour.
Maybe they have got too much real work to do, maybe they do not
really understand anyway….. I do not believe that we have still passed the
first step. That is, have a common understanding at the top and a total
commitment.

The Managing Director also played a part in influencing the process of change. He had a relaxed
management style and assumed that departments would become involved in quality
improvement projects on their own accord. Participation was not mandatory. Although this
‘friendly and open management style imbued the organization with a strong culture of family
values based on respect for the individual, many people also interpreted it as a lack for support
from twin effects of limited senior management support and middle management resistance
meats that the initiative had ground to a halt.
The top-down approach to change
In 2003, senior management decided to once again review the company’s cost structure.
Mybank had committed themselves to building a new corporate headquarters and the prospect
of this major financial outlay plus the firm’s continuing high level of operating expenses stimulated
the firm to seek cost savings. The firm brought in a large accounting firm to examine the
company’s operations and to make recommendations on how best to reduce costs and improve
performance. In an almost identical fashion to events previously, the firm elected to use an
employee involvement initiative to achieve the potential cost savings identified by the consultant
group. However, on this occasion the bank adopted a top-down rather than the bottom-up
approach to the implementation of change. A consultant was brought in from America to help
the organization with their implementation strategy. The consultant recommended that senior
managers play a major role in the change initiative. Their role was to identify organizational
problems and the likely causes, specify how improvements in performance were to be measured
and what the acceptable level of performance would be, nominate individuals to analyze and
rectify the problems, and specify timeframes. The implementation strategy was expected to
motivate middle managers through highlighting the commitment of senior management in
practice, however, this top-down approach also had its difficulties.
The General Manager of Retail Banking illustrates an example of some of these problems in using
a top-down approach to amalgamate two of his lending sections. The bank had two personal
lending sections: a housing loans section, and a consumer loans section for credit cards,
overdrafts and personal loans. Within the established banks there would normally only be one
lending section which would process both types of loans. The disadvantages of having two
separate sections were that many personal clients would often have both types of loans. Thus,
having their records spread across two separate sections led to duplication and created
administrative problems for the management of clients’ accounts.
In addition to the integration of two departments, the General Managers also elected to
introduce a new management layer that had experience with both forms of lending. Traditionally,
staff in the housing loans section knew little or nothing about personal lending and vice versa.
Consequently, managers experienced in both forms of lending were recruited and located
between supervisory audits and the Departmental Manager, with the title of Regional Lending
Managers. However, rather than physically combine the two areas in one location and develop
training systems to allow the multi-skilling of staff over time, the task of integration was seen to
provide the bank with an ideal opportunity to critically examine the whole structure of work
systems in order to eliminate unproductive tasks and perhaps reduce staff levels. As such, the
integration of the two departments became a major change project.
Four newly appointed Regional Lending Managers were given the task by the General Manager
of amalgamating the departments to ensure that the new process became operational within a
six-month timeframe. The group discussed and formulated and implementation strategy through
consultation with employees in both departments to establish the timing and range of functions
and tasks performed. Each task was then scrutinized to determine whether it was ‘value-adding’,
‘rework’ or ‘non-valuing’. Where possible tasks that were classified as ‘rework’ or ‘non-value’
adding were eliminated. The remaining work tasks were then flow-charted and bunches of related
tasks, lumped together to form new jobs. Staff were then allocated to these new jobs. The
redesigned process reduced staff numbers by eight. The bank had a policy of not retrenching
people, and those personally eliminated from the new system either found alternative positions
within the bank or they were kept on as ‘floating’ staff until they were able to find positions
elsewhere.
Although the project was given total support from the General Manager, the new Regional
Lending Managers experienced a lot of middle management resistance. For example, some of
the Departmental Managers immediately superior to the Regional Lending Managers strongly
resisted their proposed redesign of work organization. These managers were intimately
acquainted with the old processes and felt that the new design was at best unrealistic and at
worst unworkable. This middle managerial resistance slowed down the progress of the change
and acted as a major barrier to securing outcomes within the six-month timeframe. In the case of
two managers their obstruction was so harmful to the project that they were relieved of their posts.
The effect on staff morale was quite devastating. Both managers were liked and respected by
their staff. One, in particular, had spent almost his entire working life with the organization and the
way he was treated was highly disturbing for other staff. As one employee put it:
You know, even us, we are sort of thinking. ‘Well, I have been with the
bank for 15 years … and look what they did to Garry. They were not
very kind to him. How are they going to be with me?

Staff morale had also deteriorated because of the way in which general staff and supervisors
were consulted about the design of the new system. As one change agent pointed out:
We simply could not have involved everyone in the re-organization of
retail lending. No one could think of a way to do that because everyone
would have a different idea of the way it should be. It would have got too
big. So we decided to use a small team.

This top-down approach to change offended many of the general staff, especially those who
had previously been actively involved in the earlier bottom-up change projects. Once again, the
implementation of change did not prove successful, only this time the strategy adopted by senior
management had failed in its intentions to mobilize middle management commitment and local
staff enthusiasm. In the words of one general staff member who had been a very active
participator in the bottom-up approach:

Whereas before people used to be involved and we were having hassles

trying to convince the people that were up there (management) to get
involved. Now it seems to be them, up there, just telling, like a Hitler type
of situation, telling these people, down here ‘This is what you are to do!’

Question 1
With reference to the case study, discuss TWO (2) advantages and TWO (2) disadvantages of a
bottom-up and top-down approach to change implementation.
(6 Marks)
Question 2
Analyze the importance of employee commitment of this organization to the successful
management of change. Justify with TWO (2) relevant points. (4 Marks)

Question 3
Evaluate whether the Managing Director served as an ‘inhibitor’ or ‘facilitator’ of change and
evaluate the effects that this may have had on the introduction of the various change initiatives.
(6 Marks)

Question 4
Imagine you are one of the key personnel of Mybank. Discuss an action you would want to
undertake before change implementation. (4 Marks)

*** END OF CASE STUDY QUESTIONS ***