MANAGING CHANGE

Managing Change in Organization



Table of Contents

Introduction3

Organisational change within the case bank4

Structures and processes4

Strategies and staffing5

Change within the case bank - summary7

Identifying derivers of change8

Organisational commitment and organisational change10

Organisational commitment11

The importance of employee commitment12

The study14

Hypotheses17

Hypothesis 1 - internalised commitment17

Hypothesis 2 - identification commitment18

Hypothesis 3 - compliance commitment19

Findings and discussion19

Internalised commitment20

Identification commitment21

Compliance commitment21

Intent to leave22

Discussion23

Conclusion24

References27

Appendices31

Managing Change in Organization

Introduction

The financial services industry has undergone dramatic change over the past two decades. Within this context? this study examines the state of employee commitment in the retail banking industry. The research takes the form of a case study into one long established banking institution. The process of change and the management of the change process within the case bank are discussed and used as the organisational context within which various exploratory hypotheses about the effects of change on organisational commitment are tested. Following the sweeping deregulation of the 1980s banks were faced with new and competitive operating environments and as a consequence strived both to increase operating efficiencies and develop new income streams through various structural and strategic change initiatives. Implicit in such dramatic change is the relatively new orientation by banks towards marketing and more recently the adoption of relationship banking principles (Axson? 1992; Berry? 1997; Holland? 1992). The summary effect of these changes has been the creation of a climate in which the role of the bank employee has changed from “teller to seller” and where such employees represent a key facilitator in the implementation of relationship banking.

Organisational change within the case bank

The case bank is a leading banking institution within the UK and Republic of Ireland? with a retail branch network of circa 400 branches. While change initiatives have taken place? and continue to take place? within the case bank? these are typical of those being experienced by many organisations within the industry? and include changes to structures and processes? strategies and staffing.

Structures and processes

In an attempt to become less bureaucratic and to move decision making closer to the customer? the branch network has been divided into geographically distinct operating areas. Within these? much of the decision making formerly reserved for head office has been delegated to senior managers. Typically such decisions were lending related? but developing management information systems enabled area by area comparison in a range of matters? including costs and product sales. The new structure and circulated information therefore also had the effect of introducing inter-area competition.

The various change initiatives also resulted in the centralisation of much branch outlet administration? further changing the role of the branch. In essence? the various changes are resulting in the role of the branch slowly evolving into that of sales outlet.

Structural and process changes within the case bank can be summarised as follows:

the movement of decision making closer to the customer by the introduction of autonomous geographically based business units;

the development of revised reporting lines? with the separation of the sales and costs functions;

the separation of retail and corporate business to facilitate specialisation; and

the development of dedicated “group” units? for example ...