Managing change and leadership

Lawal Abdulrahman Tambari Tp024691

Contents
Introduction ................................................................................................... Error! Bookmark not defined.

Assessment of the impact on implementation of cultural change in the financial sector of Norway ........... 3

Transformational change .............................................................................................................................. 4

Transformational change in Norway financial sector ............................................................................... 4

Forces of change in Norway financial sector ............................................................................................ 5

Competitive forces .................................................................................................................................... 6

Global forces, economic, legal and political ............................................................................................. 6

Impact of change on the implementation of new organization culture ..................................................... 6

Reaction of employees on the new culture ............................................................................................... 7

Perception ................................................................................................................................................. 7

Personality................................................................................................................................................. 7

Habits ........................................................................................................................................................ 8

Threats to power and influence ................................................................................................................. 8

Fear of the unknown ................................................................................................................................. 8

Economic reasons ..................................................................................................................................... 8

Success and failures of the new sales culture in the commercial and savings banks of Norway .............. 9

Recommendations ....................................................................................................................................... 10

Mckinsey 7 S framework model ............................................................................................................. 10

Structure .............................................................................................................................................. 11

Systems ............................................................................................................................................... 12

Shared Values ..................................................................................................................................... 12

Style .................................................................................................................................................... 12

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Staff ..................................................................................................................................................... 12

Skills ................................................................................................................................................... 12

Kotter and Schlesinger six change approaches ....................................................................................... 12

Communication and education............................................................................................................ 13

Participation and involvement ............................................................................................................ 13

Facilitation and support....................................................................................................................... 14

Negotiation and agreement ................................................................................................................. 14

Manipulation and co-option ................................................................................................................ 14

Explicit and implicit coercion .............................................................................................................. 14

Conclusion .................................................................................................................................................. 15

References ............................................................................................................................................... 15

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1Introduction

Change is a phenomenon which is inevitable in every aspect of human life and it is always
constant despite the fact that people do resist change due to some reasons. Organizational change
is also a phenomenon which cannot be avoided by organizations, because internal and external
factors exist which can cause an organization to change. According to Mills and et al (20081)
organizational change can be defined as an alteration of a core aspect of an organization’s
operations. These core aspects involve culture of the company, the technology used or the
structure of the organization. This report will evaluate the impact of organizational change which
was implemented in the financial sector of Norway in the early 1990,s, this change affected two
major banks, the commercial bank and the savings bank of Norway. Conclusions on the success
and failure will be drawn and any further recommendation will be provided based on the analysis
of this report.

Assessment of the impact on implementation of cultural change in the financial
sector of Norway
Organizations change due to different reasons, and there are different types of organizational
change, Pham H (2011).2This section of the report will assess the impact of the cultural change
and implementation that occurred in the financial sector of Norway. The case studies involved

1

http://books.google.com.my/books?id=FpCMo58zcrYC&pg=PA174&lpg=PA174&dq=alteration+of+a+core+aspect+
of+an+organization%E2%80%99s+operations&source=bl&ots=JreFcXYm3E&sig=UR7vMW5lpRffvNdLkvdz3Ktow1M
&hl=en&ei=I682TqKTNcnsrAfzyZS1Cw&sa=X&oi=book_result&ct=result&resnum=1&ved=0CBkQ6AEwAA#v=onepa
ge&q=alteration%20of%20a%20core%20aspect%20of%20an%20organization%E2%80%99s%20operations&f=false
2
http://www.scribd.com/doc/13754469/CHAPTER-10-TYPES-AND-FORMS-OF-ORGANIZATIONAL-CHANGE

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two banks in Norway, which are the commercial bank, and the savings bank. The type of change
that occurred in these banks is known as transformational change.

Transformational change
This is the type of change that took place in the financial sector of Norway. It simply refers to
changing the basic characteristic of an organization, these changes includes the structure, culture
and basically how the organization relates to its environment. These changes usually occur in
anticipation of major changes in the environment of the organization. These changes are often
associated with the need for the organization to change its structure internally as well as the
cooperate culture of the organization.

Transformational change in Norway financial sector
The two major banks in the financial sector of Norway changed their organizational cooperate
culture and organizational structure in order to meet up with the needs that emerge from the
environment. These environmental needs anticipated changes which made the employees of
these banks to being marketers and sales persons instead of being financial oriented that they
were used to. Below is a diagram that illustrates the factors that can effect organizations to
change their mode of operations.

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Source: Amateur management review http://amrjournal.blogspot.com/2008/09/organisational-
change-and-innovation.html

Forces of change in Norway financial sector
Organizations all over the world have different forces that affect them to change, but these forces
fall under the above categories, Chen M (2008)3 see (diagram 1). The major force that affected
the banks in Norway was the external forces which include further deregulation and continued
competition from other financial institutions, these reasons fall under the legal, political and
competitive forces.

3
http://amrjournal.blogspot.com/2008/09/organisational-change-and-innovation.html

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Competitive forces
This force is usually associated with the fight or battle between organizations that offer to its
customer’s similar or exact goods or services. This organizations are mostly affecting by this
external force, the reason is most of this organization desire the needs to surpass its competitor in
innovation, efficiency or quality product and services.

Global forces, economic, legal and political
These factors really affected the banks in Norway, which are the commercial and savings banks.
The further government deregulations, made the banks to change their existing co operate culture
in order to meet the desirable requirement to compete in the market share in which it operates.
These are also the forces that were responsible for the mergers that took place in the financial
sector of Norway.

Impact of change on the implementation of new organization culture

This section of the report will analyze the impact of change on the implementation of new
cooperate culture in the commercial and savings banks of Norway, every organization has a
culture in which it operates and many authors defined organizational culture in various ways.
Change has impact on any organization, and employees react or resist change in different ways
Yuh-shy C (20064). The reaction of the employees towards change determines the success or
failure for the organization to achieve its goal on the implementation of the new culture.

4
http://www.jgbm.org/page/19%20Dr.%20Chuang,Yuh-Shy.pdf

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Reaction of employees on the new culture
This is a situation which is also inevitable, people react to change or in order words resist change
for various reasons. According to Hellrieyel and Slocum (2007)5 six reasons are responsible for
individual resistance to change, it should be noted that these are not the only reason , but they are
the most common of reasons why individual do resist change. The reasons are listed below

Perception
Personality
Habit
Threats to power and influence
Fear of the unknown
Economic reasons

Perception
The perceptions of the employees and managers have to be positive towards the change process,
in order for the process to be effective. Some managers and employees in the commercial and
savings bank of Norway were positive towards the change process. They realized the need to
change, it was obvious to them it was an inevitable situation and the change process is necessary
for what lies in the future. While some managers and employees saw the new culture as
proactive, creates a great deal of uncertainty and also a bit pushy.

Personality
Individual’s personality is a contributing factor when change in an organization arises.
Employees with high self-esteem are most likely to perceive the positive aspect of change, while
employees with low self- esteem do otherwise. That’s the reason why some employees and
managers in the commercial and savings banks of Norway saw the positive need for change,
while some saw the cultural change as proactive and a bit pushy. Employees that are moody, self
doubting and nervous have serious problems in changing their behaviors. They are likely to resist
change until employees with high self esteem endorses it.

5
http://www.cengagebrain.com/shop/content/hellriegel4225x_143904225x_01.01_toc.pdf

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Habits
This is also a reason why some employees resist change, due to the comfort of the way they
operate. It is a habit they are all ready used to and would want to clinch to it for as long as they
can. Habit being a constant reason for resisting change depends on the type of change. This
reason is usually not effective in transformational change, which occurred in the commercial and
savings banks of Norway. The structures and cooperate culture have been modified, therefore
there is no room for employees to operate, the way they use to in the past.

Threats to power and influence
If the new culture threatens the ability to exercise power and influence their subordinates. This
will make them to resist change, but the situation in the commercial and savings bank of Norway
did not threaten the ability of the managers to exercise power, instead they are the main agents of
the change process. Despite the situation some managers still left their jobs, because they were
not satisfied with the new sales culture.

Fear of the unknown
The employees in the commercial and savings banks of Norway are already used to the culture of
being financially oriented. The employees stay in the bank while customers come in to meet
them, but the situation where they need to go out to meet the customers is a culture that they are
not use to. So this reason makes them afraid of the unknown, so employees feel that the new
culture is going to take away their jobs in the future. One employee stated that they are trying to
sell products to customers that will make them lose their jobs in the future. Fear of the unknown
is also a reason why employees resist change in an organization.

Economic reasons
This is one of the major reasons why employees resist change; the question they ask themselves
will this new change affect my income. People are naturally selfish; therefore if change is going
to affect their income, they will try to resist it. The new sales culture in the commercial and
savings banks of Norway created a new appraisal system of measurement of performance,

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whereby an employee will needs to record the amount of sales in a week. This will threaten some
employees and make them resist change. They will feel it will reduce their performance, which
will lead to deduction of income.

Success and failures of the new sales culture in the commercial and savings banks of
Norway

Change is a process which requires implementation Efuntayo M (20106), this section of the
report will identify the major success and failures of the new sales culture which was
implemented in the commercial and savings banks of Norway. Below is a table which illustrates
the major success and failures of the new sales culture.

No Success failures
1. Employees responded more to recognition via daily Employees did not respond quite
reinforcement by branch managers in both banks. well to the formal reward system
which was introduced in the new
sales culture.
2. The crises that evolved in the implementation of the The banks offered little positive
new sales culture created a context where all the rewards for the desired behavior.
employees and managers in the banks knew something The reward system is basically at
has to be done. the disposal of the bank
managers.
3. Information was properly channeled effectively, The measurement systems had
employees were clearly aware of the need to adopt the its obvious weaknesses as they
new sales culture. It was quite obvious to them, if they emphasized the acquisition of
don’t adopt the new culture; it is possible they will lose new customers or sales rather
their jobs, because the bank would not get enough than preserving old customer
results to keep them employed. relationships, at the long run this

6
http://ezinearticles.com/?Implementation-of-Change-Management&id=4813135

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can result to loss of old
customers.

Recommendations

Transformational change is a change process which is difficult to implement, because it deals
with changing the structure and culture of organizations. The commercial and savings banks of
Norway need to adopt change management approaches in order to facilitate easy
transformational process. There are numerous well organized models or approaches used in
managing change in organizations. Below is an illustration of the management approaches to
change which the banks can adopt to tackle resistance to change.

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Mckinsey 7 S framework model

Structure

Strategy Systems

Shared
values

Skills Staff

Styles

Source: Value based management.net http://www.valuebasedmanagement.net/methods_7S.html

This framework is used to ensure all parts of the organization are in harmony with each other, the
framework is depicted above.

The reason why shared values is in the middle of the model is that, shared values determines the
level of development of the other critical elements of the model, which includes the
organizations structure, strategy, skills, styles, staff, and systems. This model is used to help
realign and reinforce, in order to improve the performance of the change process. This model
will help the commercial and savings banks of Norway to ask the right question involving the
current change that is taking place in the organization and also identifying the current situation of
the organization.

Structure
The plan initiated to maintain and create competitive advantage over the market share and
competition which exist in the organization.

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Systems
The activities which the employees and management carryout on daily basis in order to
achieve the desirable goals and objectives of the organization

Shared Values
This refers to the cooperate culture of the organization and the values which are depicted in the
organization. This element is the core of this model

Style
The style in this aspect refers to the type of leadership style which the organization is
operating; this is of great importance, because leadership has a great impact in managing
change in organizations. A good example is the recognition of branch managers and middle
managers in the commercial and savings banks of Norway as the agents of change and not the
CEO’s of the banks.

Staff
This element is concern with the capabilities of the employees; it is also of great relevance to
the organization when it is trying to realign and reinforce, for the benefit of improvement.

Skills
This refers to the actual skills and competence of the employees, do they have the desire
competence to carry out the change initiated by management, and are they any skills gaps.
These are the questions ask in relation to this element.

Kotter and Schlesinger six change approaches
This is one of the most effective approaches to manage resistance to change in an organization,
the approaches were initiated or created b y Kotter and Schlesinger for effective change
management. The approaches are illustrated below.

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Kotter and Schlesinger six change approaches

Education and
Communication

Participation and
Involvement

Facilitation and
Support

Negotiation and
Agreement

Manipulation and Co-
option-

Explicit and Implicit
Coercion

Source: 12 manage the executive fast track http://www.12manage.com/methods_kotter_change_approaches.html

Communication and education
Educating the employees on the new change and an upfront communication between
management and the employees with regards to the change that will take place, this is reasonable
in order to prevent or reduce the level of incorrect rumors concerning the effect of the change in
the organization.

Participation and involvement
When employees of an organization participate in the change effort through involvement by
management, this tends to increase employees motivation towards realizing the new change

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rather than resisting the change effort. It is greatly recommended that management should
involve employees in change processes.

Facilitation and support
Management should try and provide the basic support for its employees in terms of difficulties
faced by the employees during transition stages of the change process. This can be achieved by
management with the introducing of special training, counseling and time off work with regards
to the employees situation.

Negotiation and agreement
This approach is relevant to employees who are in the position of power to resist change in an
organization, management should try to provide incentives to these employees not to resist the
change efforts or provide the means for the employees to veto the change which is threatening. It
simply means management should try and initiate a means of negotiation and agreement for
employees who are resisting change in the organization.

Manipulation and co-option
This approach is should only be used by management where other tactics fail, the approach
involves manipulation of the leaders of employees resisting change. This can be achieved by
selecting the leader into the planning committee for appearance only not for substantial
contribution.

Explicit and implicit coercion
This is usually used by management as last alternative, when employees keep on resisting the
change effort in an organization. Managers can clearly or completely force employees into
accommodating change by making clear that resisting changing can lead to losing jobs, firing,
transferring or not promoting employees.

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Conclusion
In the process of managing change in organizations, it is relevant to identify the agents of the
change in the organization, this will make the change effort easy to implement if the agents of
change are fully educated on the change process and are aware of the importance of the change
in the organization. The management in organizations needs to utilize the knowledge of
managing changes in organization before change can be perfectly implemented.

References

Anon. (2011) Dealing with resistance to change, six change approaches [Online]. Netherlands:
Value based management .net. Available from:
http://www.valuebasedmanagement.net/methods_kotter_change_approaches.html [Accessed 23
June 2011].

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Chen, M, 2008, Organizational change and innovation [online] Amateur management review,
Available from http://amrjournal.blogspot.com/2008/09/organisational-change-and-
innovation.html, [Accessed on 21th June 2011]

Efuntayo M. 2010. Implementation of change management. [ONLINE] Available
at: http://ezinearticles.com/?Implementation-of-Change-Management&id=4813135. [Accessed
10 July 11].

Hellrieyel and Slocum (2007) Organisational behavior [Online]. U.S.A: Thomson south
western. Available
from: http://books.google.com.my/books?id=VAfMJO11rWIC&pg=PA456&dq=organisational+
structure+book++Don+Hellriegel,+John+W.+Slocum&hl=en&ei=adsRTuPMEoeyrAeX_tiHBA
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Moore, M (2009). Resistance to change: how it can help with the success of your program me.
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how-it-can-help-success-your-programme/. [Accessed 13 July 11].

Roy, K E tal. 2010. Chapter 4 Personality, affect, and organizational change: a qualitative
study . [ONLINE] Available at: http://www.emeraldinsight.com/books.htm?chapterid=1870491.
[Accessed 13 July 11

Seel R (2008) New Insights on Organisational Change [Online]. UK: New Paradigm consulting.
Available from: http://www.new-paradigm.co.uk/culture-complex.htm [Accessed 25 June 2011].

Stroh U M (2005) Approaches to change management [Online]. South Africa: University of
Pretoria. Available from: http://upetd.up.ac.za/thesis/available/etd-05092005-
123748/unrestricted/03chapter3.pdf [Accessed 28th June 2011].

Specht M (2008) change management approaches [Online]. Australia: Specht network of
expertise. Available from: file:///C:/Users/AbdulR/Downloads/ref%20mcl22.htm [Accessed 18th
June 2011].

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Yuh-shy C. 2006. Individual resistance from employees to organizational change. [ONLINE]
Available at: http://www.jgbm.org/page/19%20Dr.%20Chuang,Yuh-Shy.pdf. [Accessed 10 July
11]

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