Change Management in the Bank

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Introduction

In recent times, the concept of change management has gained popularity within most organizations and businesses. Change management has been defined as a systematic process of transforming individuals, teams and organizations with the aim of improving their performance (Wardale 2003, par. 3). Change management in business environments has the potential of injecting morale into the workforce thereby increasing the profits of the institutions and effectiveness in the delivery of services. This paper will discuss the origins and development of change, implications of that change, preparation of employees and managers to the change and the effect of adopting the formal project management methodologies and approaches.

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According to Wardale (2003, par. 2), the process of change management is carried out in a predetermined manner with a well-laid down framework. The frameworks mostly applied in change management are the emotional framework of change, employees concerns, change model and the phases of change. Wardale also noted that change is accompanied by several principles that are vital to its success. Among them are the people’s perceptions and attitudes in relation to the change. The understanding of the barriers to change at the individual and organizational levels is also imperative in achieving the desired results. Moreover, knowledge of the drivers of change and ways of tackling the barriers against the change is important considering the change will also affect other processes within the business. The managers need to effectively communicate with the people and explain the expectations while addressing the fears associated with the inception of the new processes (Wardale 2003, par. 3).

Mintel compare media (2010, par. 2) forecasted major changes were expected in the banking sector due to the regulations imposed by the governments and the banks’ limitations. The banks are likely to institute changes in debit card marketing, reward programs, cost-cutting measures and increasing deposit-taking. These initiatives are designed to maximize operations and profits thus improving the shareholder’s value. Standard chartered bank was no exception. The managers had to come up with ways of dealing with the skyrocketing costs of its operations.

Standard Chartered Bank is a British bank that operates in more than seventy countries in the world. With its headquarters in London, the bank has a network of more than 1700 branches predominantly in Asia and Africa where most of its operations are based. The bank offers a wide range of services which include banking, loans and mortgages, insurance and investments to its individual and corporate customers. The introduction of the next-generation technology to replace the capitalist system in the bank would be important in achieving growth considering 90% of its profits come from Asia and Africa operations (Standard Chartered Bank 2010, par. 4). The capital system is an old customized windows based framework that handles all transactions involving savings, investments and insurance services, particularly in Asia and Africa. The upgrading of the database to a more advanced application would enhance savings since the time required to clear a transaction would be lowered from 48 hours to six hours. This would lead to tremendous growth in profits and savings particularly for the Asian and African subsidiaries. The change would mostly target the operations in India, China, Hong Kong, Kenya and South Africa.

Explanation of the change in the bank

The Standard Chartered Bank was operating on an expensive, hard-to-maintain platform that was unable to enhance customer satisfaction and could not support new products thus impeding efficiency. The customers had to wait for two days to get feedback owing to the duration the old platform took to process vital mainframe batches. The bank, therefore, commissioned a change management team that included its technology partner to transform the capitalist system from the old mainframe to a UNIX platform. The upgrading of the database management was also done with the aim of enabling the reuse of the existing applications in modern and advanced platforms without necessarily investing in expensive new technology.

The implementation of the organizational change was based on Kurt Lewin’s unfreeze – change – refreeze model. The program’s scope entailed providing leadership to a highly rated team in upgrading the mainframe platform to the UNIX platform. This was to be implemented across the investment, insurance and savings operations of the business in the United Kingdom before extending it to the subsidiaries in Africa and Asia. The program was to improve the database to allow regular updating in the system thus ensuring the clients received timely information on their investments. The implementation team was also responsible for standardizing the infrastructural network in the bank to avoid restricted access to the website that came up during periods of increased activity. The team was also mandated to move their clients to a centralized system thus offering satisfactory activities for them. Communication was to be integrated into the whole process thus boosting the relationship of the clients, bank staff and the core areas in the business.

During the unfreeze stage, the change management team took time to inform and prepare the employees and the clients of the imminent upgrading of the technology in its capital system. The management team shed light on the drivers of change and the short-term and long-term implications of the change to the staff, clients and organization. This was imperative since different people have varying interpretations and expectations of change. It was also vital since exposing the gaps and conflicts areas in the process would allow the team to come up with mitigation measures aimed at averting the sabotage of the business strategy.

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According to Paws (2009, par. 6), communication of the large-scale transformation was essential to enhance the understanding of the reasons fuelling the change. The information was provided at the same time to all the customers and staff and involved the utilization of emails and newsletters. However, personal concerns especially those touching on the deployment of employees to other departments were addressed more intimately to allay the potential fears by giving the affected time to express their reservations.

The process involved wider consultations among all the stakeholders to avert disruption and inconveniences that might have resulted from the switch. The change team also met regularly with the stakeholders to brief them on the progress while at the same time seeking commitment for the process. The technology provider had to liaise with the hardware providers to ensure the efficacy of the software and the long-term usage, especially in the computers. The need to gauge the cost versus performance of the upgraded technology to the clientele made the bank invest money to carry out an assessment. A pilot study was done in the United Kingdom outfit before the project was rolled to the subsidiaries in Asia and Africa. Popularizing the initiative benefits also took place while the change team provided the needed leadership by supporting the concerned people throughout this period. The process involved a lot of training and mentoring of the staff and the regular publication of short-term successes aimed at boosting the morale of the people (Wardale 2003, par. 5; Paws, 2009, par. 4). The final outcome of the transformation was to enhance the cost-effectiveness of the hosting services, simplify the maintenance and lower business risks to the bank clients. This is due to the superiority of the platform in terms of automation, processing reliability, security and monitoring capabilities. Another outcome was to lower the costs implications of the systems to the bank by reducing time spent on processing the information and addressing customers’ concerns. The customer’s complaints were expected to reduce by 20% in the first month after which they were to be contained within 10% of the initial numbers after the whole system became fully operational.

The re-freeze stage entailed a post-implementation review and the eventual publication and distribution of the information to all the subsidiaries. There were also seminars and workshops to address any issues that may have arisen during the implementation. Rewarding of the team and reinforcement of the concepts of the new technology were also done in a bid to boost morale and also improve the overall performance of the workforce.

However, like Kotter and Schlesinger (1979, p. 56) have asserted, the transformation had to encounter barriers and resistance before its full implementation and entrenchment in the organization. Although the staff was briefed on the change in technology, constraints were encountered in the adaptation and reinforcement. For instance, the customers faced challenges in the utilization of the new software and thus kept inquiring from the bank staff. The staff was not overly conversant with the system initially and was unaccustomed to the efficacy in processing that came with it. This led them to waste time, particularly when processing monthly feedback reports. The adopted technology also experienced less than optimal output but the delivery team was equal to the task and thus rectified the problem.

Effect of change in the bank on the bank’s performance

According to Kolo (2007, p.1), change management in banks leads to right-sizing and increased prospect for growth in premiums and profits brought about by cost-cutting and revenue growth buoyed by efficiency. The change also creates innovation and avails more opportunities to the banks thus may lead them to diversify to other areas.

In the case of the standard chartered banks, the technological upgrading had the effect of ensuring flow of data was streamlined and made efficient. The bank was thus able to record high numbers of investments transactions particularly in Africa and Asia thus reducing the customer’s physical visits to the banks. This also saved on human resources manpower at the customer service and thus the energy was directed to other core areas. The ability of the UNIX to update regularly was an added advantage to the bank thus doing away with the need to have enormous files of data.

The system also enhanced the efficiency in the production of some vital batch processes by reducing the time taken by 70%. Furthermore, the hosting charges plummeted by 60% thus creating a lot of savings. The increased speed in processing capabilities also brought greater efficiencies in all bank services mainly for online bankers. Overall, the bank’s performance was greatly improved in terms of its profitability and the image it got from the efficiency that came with the upgrading.

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The bank’s profits rose by a margin of 40% in the second year of its implementation while the bank was awarded the first runners-up award in the national fete of financial institutions in the United Kingdom.

Impact of the change to individuals in the bank

The impact of the change on the bank’s employees was limited owing to the fact that the management had prepared them for the imminent changes. However, as Wardale (2003, par. 6) noted, any change in a structure and operations of an organization must have negative or positive implications on the employees and the customers. The upgrading of technology to UNIX had more benefit to the employees in the bank since it made their work simpler and saved on time. The fact that the platform offered enhanced processing capabilities made the employees more productive and motivated in their responsibilities. This saved them the agony and distress associated with inefficient technology (Paws 2009, par. 6). The involvement of the employees from the inception of the change process provided them with the platform to air their concerns (Heathfield, n. d., par. 3). Their concerns about their acquaintance with the technology-led the management to offer them training on the usage of the applications and the databases. The employees, therefore, gained professional development thus becoming confident and motivated to address the customers’ inquiries.

Although advanced technology is accompanied by retrenchment due to right-sizing, this case saw the affected employees deployed within other departments. Most of the employees in the bank preferred deployment despite being given the option of early retirement. Those who went on early retirements were given handsome sendoff packages and trained on the best ways to invest the money.

The bank management received wider accolades from various accreditation and monitoring bodies for their innovativeness in cost reduction while giving the customers value for their money. The managers also perfected their leadership acumen by leading the bank safely through this challenging moment. Their timely and regular communication to the employees removed the uncertainties and anxieties brought about by the improvement. According to Bacal (2007, par. 12), the managers are stressed, avoid talking about the situation and deny the impact associated with the change. However, the emotional needs of the employees should be addressed to ensure their productivity is maintained at this time. The bank management was aware of this and hence provided moral guidance to the bank employees.

Barriers to change management in the Bank

Most organizations are undergoing structural and organizational changes in recent times with an aim of downsizing thus improving their shareholder’s worth (Kolo, 2007, p. 2). Nevertheless, they are faced with several barriers before they can achieve the desired results. According to Joyce and colleagues (1990), the market is the single major barrier for businesses to make changes since opportunities come with constraints that make the change unattainable.

According to Baron and Greenberg (1990, p. 127), individual factors can play a major role in blocking organizational change. Some of these factors include the fear of the unknown, economic insecurity, threats to already established social relationships and failure to accommodate the change. This is driven by the notion that change is a disruptive and stressful affair that must be countered by some of the resistance. These factors need to be addressed adequately for any meaningful and fruitful change to take place in an institution. The employees fear the loss of power, skills and income that comes with their present job dispensation thus making them sabotage the process. The deployment of staff to other departments may have separated employees who had developed social relationships and cooperation for many years. This may cause irreparable emotional stress that might take longer to overcome. These situations are responsible for the resistance witnessed lately (Tutor2u n. d., par. 4).

Baron and Greenberg (1990, p. 145) also asserted that organizational barriers are commonly observed during the change process. Threats to existing power structures and previous unproductive attempts to reform are among the organizational barriers likely to be experienced in the banking industry especially during bank mergers. In the Standard Chartered case, the reorganization of departments may face resistance from the respective heads who are wary of losing the grip of their authority. Unsuccessful attempts to institute the same changes in the same or other organization and differences in the implementation are also known impediments to change. This is because the opponents fail to understand how the organization will try to achieve the expected outcome using the same approach. The bond formed among a particular clique of workers and the structural apathy in some core processes may curtail the adoption of change management.

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The application of the PRINCE2 methodology

The success of any project in change management is pegged on the integration of the project management methodologies in the change process. In the Standard Chartered case, the effectiveness of the process was guided by the principles of the projects in controlled environments (PRINCE2). The utilization of these project-managed methodologies will continue to find relevance, especially in the post-economic crisis era. According to an article by Bousquet (2010, p. 3) in the Herald Times, the state government in Florida was seeking ways of adopting a more business-like approach to the running of the state agencies. This was to involve the usage of the methodologies in ensuring the state agencies eliminated the positions of middle managers in order to achieve savings. The changes would see one manager supervising at least 10 employees.

Rabobank utilized the prince2 methodology to entrench the prince2 tool in their business with the motive of achieving about 10% of savings in the project management and also improve transparency. This was part of the business case management (Rabobank, 2009).

The upgrading of the technology was done in a systematic manner that took into account the tenets of the prince2 tool. The project followed the steps to ensure the desired results and outcomes were achieved while challenges were competently solved. The change team first acquainted itself with the problem at hand. In this case, the limited efficiencies occasioned by the old platform were the root cause of the customers’ dissatisfaction with the bank services. The bank lost the much-needed resources in maintaining the ineffective and costly platform. The change management team then came up with the best tenable solution to avert more losses (Turner 2009, p.2)

Moreover, the process embraced the key steps and involved all the stakeholders who are important in the successful completion of the management. The management team ensured that all stages were run diligently and the progress was well monitored. The passage of information to the relevant stakeholders during the whole process is another factor that is vital in the project. The change team in this case used all means at their disposal to enhance the productivity of the employees and also to win the confidence of the clients and managers. The closing stages of this business management case also recognized the need for rewarding the delivery team while setting measures that enhanced the evaluation of the project.

Methodological procedure followed

Prince2 methodology has gained popularity in the United Kingdom with most institutions employing it to institute far-reaching changes in organization and management (Office of Government Commerce 2009, p. 342). The team utilized the method because of its simplicity in application especially in large organizations with diversified operations in several regions around the globe. The fact that the tool can be tailored to meet the needs of a particular situation made the adoption of the application fulfilling on the part of the delivery team since it offered flexibility. The team followed the seven major processes outlined in the prince2 methodology (Office of Government Commerce 2009, par. 342).

The initialization stages saw the selection of the team and setting the scope of the work. The team then reported to the board and briefed them on the course of action. This ushered the step where the team leader and his supporting staff were selected and given the go-ahead to implement the project. The prince 2 tool was integrated together with the Kurt Lewin model of organizational change to ensure maximum results were achieved (Wardale 2003, par. 8). The project board authorized all the stages of the execution by the change team after receiving the progress reports. The project did not have major obstacles thus the overseers were always supportive to the team and committed to the cause. The project was implemented in stages to ensure no disruptions and inconveniences were experienced in the business. This was in tandem with Adler (2008, par. 7) who noted that the implementation must be assessed for loopholes and rectification measures taken to improve the situation.

The team made sure the risks to the business which could have come with interruptions of the databases and the websites were minimized. The extension of the project to the other regions and the complete switch to the new technology was accompanied by training and mentoring that enhance the understanding of the concepts of the UNIX technology. Evaluations were then made and follow-up actions put in place that allowed the team to discover the inefficiency with the connectivity in the days that ensued the commissioning of the project.

The project evaluation was carried to gauge the performance versus the cost and the flow of complaints and inquiries made by the customers and clients. This also made the bank direct its attention and resources to other productive sectors and activities.

A methodology is a useful tool that should be adopted by all managers in this era of competitive and unpredictable business environments. The process-based approach ensures that the management of the projects is led systemically by competent and qualified personnel who have the technical expertise of using the prince2 tool. It helps in the selection of the persons to be involved and their specific responsibilities.

The application of the methodology at the beginning of the project could have hastened the overall project. However, the integration of the concepts in the process provided the drive and direction taken by the team. The training of the staff was done throughout the change process to orientate them with the methodology (Adler 2008, par. 6).

Change in the bank

Some improvements were observed in the bank which was part of the expectations the upgrade was supposed to achieve. The project improved the overall efficiency of the investment services by ensuring transactions were timely. The integration of the prince2 concepts made the projects cheaper and thus saved on the implementation costs. The savings for the bank were estimated at around $ 10 million after the two and a half years return on the investment.

The change in the bank had mixed effects on the different stakeholders. It not only improved the morale and workplace culture but also enhanced the efficiency and productivity of the workforce. The prince2 also acted as the vehicle for effective delivery of the applications required to propel the clients’ desktops. The operations of the bank were streamlined thus effective monitoring, coordination and communication among the various departments were achieved. This saved time and resources and made savings. The managers also had confidence instilled thus had the courage to initiate other bigger projects (Adler 2008, par. 5). However, the deployment and the termination of long-term social relationships caused distress to the staff thus lowering their productivity. Although this happened only to a few individuals, its effect on productivity cannot be underestimated.

Conclusion

Organizational and management change are factors that will continue impacting businesses and corporate organizations as they try to cut costs (Kolo 2007, par. 3).

The change management employed by the Standard Chartered bank yielded fruits in terms of improved efficiency which impacted positively in the bank profitability. The customers received satisfactory services that saved them time. However, individual and organizational barriers were experienced during the change process.

The prince2 methodology provided the needed drive and direction to the team and the bank during the change process. The flexibility of the methodology proved an advantage since it enhanced its application and adoption. Improved performance and efficiency were observed in the bank after the successful implementation and training of the staff. This was reflected in the savings made and return on investments. The adoption of change management and its integration with the prince2 project management is a sure way of improving organizational performance.

Reference

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Bousquet, S. 2010. Alex Sink promotes cost-saving ideas for state agencies Herald Times.

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Joyce, P, Woods, A. & McNulty, T. P. 1990. Barriers to Change in Small Businesses: Some Cases from an Inner City Area. International Small Business Journal, Vol. 6, No. 4, pp. 49-58.

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Office of Government Commerce. 2009. Managing successful projects with PRINCE2 (5th Ed.). London, Stationery Office. pp. 342.

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Rabobank. Implementing PRINCE2® at Rabobank. Web.

Standard Chartered Bank. (2010) Banking Services and About Us. (Online). Web.

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Turner, J. R., 2009, The Handbook of Project-based Management. Washington D. C: McGraw hill companies

Tutor2u. n. d. Management – Resistance and Barriers to Change. (Online). 2010. Web.

Wardale, D. 2003. Resource Kit: Rural Health Service Development. (Online). Web.

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