Managing and Leading Strategic Change - Case Study Example

Managing and Leading Strategic Change Table of Contents Table of Contents 2 Introduction 3 Managing and Leading Strategic Change in Banking Industry: 3 2. Key components of a leading and managing strategic change competency framework: 5 2.1. Lewin’s Change Management Model 5 2.2. McKinsey 7-S Model: 6 2.3. Kotter’s 8 Step Change Model: 7 3. Key competencies of change mangers in UK banking sector: 8 3.1. Exact Attitude: 8 3.2. Effective Knowledge 9 3.3. Essential Skills 9 3.4. Characteristics of Next Generation Leaders: 9 4. Competency framework of leader of organisation change: 10 Conclusion 12 Reference list 13 Introduction Flamholtz and Randle (2008) stated that globalisation, financial and political instability, environmental sustainability and other operational factors are greatly affecting businesses. Management level employees have to analyse business operations and policies so that they can modify operational strategies. Management of the strategic change is crucial for the different products and service providers. Moreover, managing and guiding the change is very important for service sector organisations. Banking is one of the major parts of the service industries, such organisations have to employ strategic change for various economic norms, conditions, and government rules. In the current study, Future Back approach and change landscape are used to develop strategic change objectives for the upcoming 5 years and probable reaction of change related barriers are outlined. Key competences of strategic change leaders of banking institutes are outlined along with a competency framework that helps in making self evaluation (Gupta, 2011). 1. Managing and Leading Strategic Change in Banking Industry: “Future Back” approach: Banking and financial services are one of the major service industry segments. This segment of the UK economy is controlled by some leading banks like RBS Groups, HSBC, Barclays, Lloyds Groups, Santander, and Nationwide. These banks are utilising various strategic controls and regulations for the overall industry players. However, apart from the strategic control, the banks have to deal with financial crisis, UK banking regulations, monetary policy and wealth and liquidity of the clients. Organisations will be facing certain challenges that are hampering customers trust and growth in the financial market of the UK. Therefore, such organisations are seeking for strategic change in the operational policies. In the next five years, management have to upgrade their operational policies for obtaining required growth, sustainability and customer’s reliability (Emmerson, 2010). UK banking sector management level expected to be facing certain challenges in the upcoming five years. Cyber crime: Grundy (2004) opined that it is one of the major threats of the banking institutes. Criminals are using the online portals of the banks to access the confidential customer data and bank robbery without any physical presence. Thus, the management have to modify the operational strategies of the organisation so that they are able to increase level of safeguarding against such unfair practises. Mainly, banking sector need to promote their level of safety. Management need to increase the rate of scrutiny on the use of web portals, banking services and customers background checks. Effecting cultural change: In the UK based banking service, organisations will be facing the challenge of cross cultural conflicts. Gupta (2011) argued that diversified customer backgrounds, employees’ views and beliefs are affecting the business operations. Thus, management have to redefine their strategies as per the cultural and socio-economic background of various stakeholders. However, such strategic change can face certain barriers. Apart from the above mentioned factors, bank managers and leaders will be facing complexity regarding the regulatory examination actions. Moreover, developing financial strategies faces complexity as LIBOR, MIBOR and FX rates are fluctuating rapidly. Banks have to cope up with various national and international financial regulators. Management have to examine present economic and customer perception situations and different types of technological requirements. Technological factors will be creating biasness among existing employees. E-banking systems are leading the employees to a completely new ambience. Thus, UK banking managers are required to develop proper transition in strategic change. Change landscape will be most relevant one that helps in managing and guiding change in the operational practises (Kotter, 2012). Change landscape’ for the strategic changes: Gupta (2012) stated that change landscape can be defined as the set of action that is adopted chronologically for adopting change management policies. Banking firms will be involving their employees with an agreement of supporting them. Employees will be guided to meet a smooth transition along with the new environment, procedure, organisational culture, developing interpersonal relationships and developing the employee’s behaviours. Leaders or managers have to get involved in the process of developing each employee involved in the operation. Management have to evaluate organisational position and operational practises so that they can gain the necessity of change. Development of suitable plan is essential so that they are able to maintain the synchronised action strategies. Managers or group leaders are required to communicate, engage people, allow them to give suggestions and smooth the progress of involvement of employees various branches and departments. Such strategies will be helping banking and financial institutions in providing highest quality service to the clients and retain the experience staff and developed skills among the new employees (Nolan, 2009). 2. Key components of a leading and managing strategic change competency framework: Management level employees will be leading and managing strategic change with the help of competency framework. There are many key components that are essential in terms of the developing change management policies. Such components can be expressed with help of different change management theories and models promoted by different scholars or researchers. UK based banking sector leaders can use the theories like “Lewin’s Change Management Model, McKinsey 7-S Model and Kotter’s 8 Step Change Model”. Such theories will be helping leaders to bring best possible transition among the employees to a new operational and managerial policies or framework (Lueddeke, 2010). 2.1. Lewin’s Change Management Model Kurt Lewin designed the change management model as he observed that employees prefer to remain in the safe zone. His change management policy outlines three key stages or components. Unfreeze: Kurt Lewin observed that the people resist change in the workplace or operational strategies. Thus, unfreezing strategy will be effective enough to lead and manage strategic change. Banking sector leaders can use motivational policy to guide their follower to the objected change (Nolan, 2009). Transition: After implementing the change management strategies, leaders are required to guide their employees to the transition process. In the stage, leaders have to allocate certain amount of time to manage and lead change. Banking sector employees are required to have highly efficient leadership and encouragement power to achieve predefine success criteria. Refreeze: Finally, leaders have to refreeze the banking employees and implement new guidelines. In this stage, leaders evaluate banking service provider employee’s performance with new operational criteria (Platts and Yeung, 2000). Organisational leaders are using the model in order to increase smooth transition of change strategies. 2.2. McKinsey 7-S Model: McKinsey 7-S model aids change leaders in managing and leading employees to a new ambience and strategic fits. The model depicts that there are seven components involved in the strategic change process. UK based banking sector leaders can use these model so that they are able to implement change among the service providers. Strategy: Leaders must develop a change plan that will help in implementing new operational and service strategies. This process will help the banking organisation in maintaining and increasing competitive advantage (Price, Ganiev and Newson, 2003). Structure: Leaders have to create organisational structure of the banking firms. This helps in gaining an insight on the position of the employees. Systems: Banking organisation leaders need to describe the operational and service provisions of each employee. Leaders will be effective enough to guide employees individually to transiting change. Shared Values: Leaders of the banking organisation need to outline new core values, work ethic and corporate culture to the employees so that they are able to offer the clients with more core values (Platts and Yeung, 2000). Style: Leaders need to select one particular style to guide and implement change. Staff: Leaders must know the capability of their followers so that changed strategies can be implemented easily Skills: Leaders must use the existing skills of the employees in changed operational process (Ratz, 2014). 2.3. Kotter’s 8 Step Change Model: John Kotter, Harvard University Professor developed a change management model during the year 1995. According to the model, leaders are supposed to convince their subordinates or followers regarding the necessity of change. In the model, 8 different components are involved in transiting change. Banking sector leaders will be effective enough to implement innovative strategies like online banking, role change and other administrative strategies. Increase urgency: Banking sector leaders have to motivate employees to adapt to changing strategies and implement specified objectives. In such process, leaders have to outline the threats and opportunities to employee involved in change process (Tjosvold and Leung, 2004). Guiding team development: Leaders have to assess the skills and capabilities of the employees so that they can employ properly skilled people. This component of change management will help leaders in developing employee satisfaction and loyalty. Moreover, banking employees will be satisfied as jobs are allocated on the basis of the skills and competency. Implementation of company vision: Leaders have to communicate company vision and strategies with the employees. Banking sector employees have to maintain trustworthiness among the investors or other clients. Communicate buy-in: Leaders have to communicate the necessities of change management. In this process, banking employees are trained on the basis of new technology or accounting and financial system (Turner, 2009). Empower action: Banking is one of the most important service segment, thus, in order to implement change management strategies leaders must be effective. Change related barriers are mitigated with the help of constructive feedbacks which are collected from the experienced employees. Moreover, leaders need to provide rewards for the efficient employees. Set up short-term goals: Banking sector leaders are setting up short terms goals for the changed operational responsibility. Short-term strategic orientation will help banking leaders to increase the flexibility. Do not let up: Leaders have to encourage the banking employees for the further change irrespective of the failure they might have faced. Leaders have to set new goals and implement the concept of Kaizen. Leaders can improvise new strategies for training and developing employees according to the change requirements (YoderWise, 2007). Construct change stick: In the banking sectors, leaders are involving change in operational policy. Banking leaders are using the techniques of employment, role endorsement and developing the skills of change leaders. Finally, banking service related changes will be emerged with organisational culture. 3. Key competencies of change mangers in UK banking sector: Change managers are playing crucial role in the UK based banking sectors. Leaders must have the competencies like proper attitude, relevant skills and required knowledge. Such traits will be helping the leaders to guide and lead managerial, strategic and administrative change among the existing employees (Turner, 2009). 3.1. Exact Attitude: Tjosvold and Leung (2004) stated that the leaders of the banking industry must have great perseverance so that they are able to increase the level of transition. They are supposed to act firmly in complex situations where they have to deal with the labour-intensive processes. Effective leaders can control their feelings and emotions to boost changing capabilities among the employees. Financial service providers have to deal with the irritated customers, frustrated group members, employees having contradictory priorities and many other unexpected problems. Therefore, the leaders need to express more determination and endurance to meet the challenges or obstacles in implementing change strategies. Price, Ganiev and Newson (2003) argued that financial industry leaders are able to express the career-development opportunities to the employees. Banking industry employees must be motivated so that they will contribute more efforts to the organisational activities. Attitude represents more crucial competency of the change leaders than the skills and knowledge they are having. Leaders must be having the friendly and diplomatic attitude so that they can motivate, guide and manage change among the employees. Bank leaders have to be tactful and diplomatic in order to contrast employee needs and organisational change requisites (Lueddeke, 2010). 3.2. Effective Knowledge Change agents or the banking industry leaders must have relevant or understanding of the business operations. It helps them to implement change management strategies and project modification (Kotter, 2012). Moreover, it can be expected that the banking leaders must pose proper trustworthiness and respect towards their role and responsibility. UK banking sector is facing huge challenge regarding economic crisis and global political and environmental. Service sector leaders are using various strategies like technological and service related knowledge. Efficient leaders are disseminating knowledge regarding the perception and expectation of the customers. Behaviours of investors or the lenders are changing rapidly. Mainly, the knowledge of leaders is helping in transiting change among the various stakeholders of the banks (Gupta, 2011). 3.3. Essential Skills Change agents must have flexibility in developing strategies to meet the volatility and ambiguity in the operational process. Effective skills of the banking leaders will be helping in mitigating the challenges like priority conflicts, cross-cultural traits, banking technology and developing and other challenges related to strategic change transition. Banking sector leaders are required to have analytical skills, financial and political decision making skills. Moreover, banking is a service generation segment, so, effective interpersonal associations and communicating skills are highly required from the banking sector leaders. Finally, it can be said that all the competencies will be helping the leaders to make smooth transition of the change management strategies (Flamholtz and Randle, 2008). 3.4. Characteristics of Next Generation Leaders: Financial service sector is going to face more diversity in the near future so leaders are required to use more diversified set of strategies. In the next five years, change agent should have the following characteristics. 1. Conventional commanding model must be avoided so that effectiveness of the leaders will increase. 2. Excellent ego management skills 3. Stress management 4. Put more pressure on the strategies like collaboration and teamwork to increase the feasibility of financial services. 5. While implementing change strategies, shared culture must be empowered. 6. Future leaders must evaluate their roles and responsibilities periodically so that changes can be emerged (Grundy, 2004). 7. Anger management and showing sympathy to the involved parties. 8. Seek for employee’s contribution. 9. Increase diversity among the decision making system 10. They must maintain equality among the employees (Emmerson, 2010). 4. Competency framework of leader of organisation change: The UK based banking organisations are facing huge challenges from economic crisis, customers’ reliability and currency exchange rates. Fall of the major banks hampered the reliability among the customers. Therefore, banks are using the innovative strategies and change in operational and service provisions (Flamholtz and Randle, 2008). Leaders have to manage and lead change among organisational segment and guide existing employees so that obstacles of change can be removed. Banking industry is demanding relevant skills and knowledge among the leaders to manage strategic change. Competency framework is one of the key knowledge development tools, which is used by contemporary leaders. Such framework is developed on the basis of the four different stages. Such process also helps the leaders in framing various positive parts and identifies the weakness. Gradually, leaders can increase their level of competencies by reducing the weakness (Gupta, 2011). First step: Prepare UK banking leaders should be outlining the purpose of developing competency framework. In the stage, people are able to gain an insight on changed roles and responsibilities. Moreover, leaders must be able to analyze employee’s performance and skills so that they are able to lead strategic change effectively. Banking sector leaders are required to develop one competency structure team. Leaders must manage strategic change as per the employee diversity. Second step: Gather Information Leaders must be capable of observing or evaluating employees and followers in order to judge performance as per assigned roles and responsibilities. Banking sector leaders are interviewing employees in order to gain insights on restraints of change. Questionnaire survey is used to analyse operational fatigues that acts as a barrier of strategic change. Leaders have to evaluate strategic plans and objectives of the financial service provisions. Moreover, information collection needs to cover the areas of business policies, descriptions of roles and responsibility of the employees and local regulatory frameworks. Such information increases level of competency of the change agents (Price, Ganiev and Newson, 2003). Third Step: Constructing change Framework Banking institutes are improvising strategic change in order to meet the external and internal challenges. Strategic change agents are creating various groups and subgroups of employees as per skills, competency and experience. It helps the leaders to execute change easily and smoothly. Banking leaders have to supervise and lead their operational and service providing teams. Leaders must be flexible enough so that they can change their dimension of direction and support as per different conditions. In the financial service, leaders are required to take more initiative so that they are able to communicate goals and changed roles among the staff, monitor performance, motivate, create one succession plan and maintain organisational standards (Tjosvold and Leung, 2004). Banking leaders or change agents have to increase ideology for recruiting and staffing new employees for new set up. Vulnerability of developing job descriptions and role of employees will increase potential success of the strategic change. Fourth Step: Implement Leaders must have the competency to implement strategic change smoothly. It involves certain stages: Business objectives linking: Banking industry requires effective connections between employees or leader competencies and organisational goals. Banking or financial sector leaders are required to reward or appraise competencies employees in order to change organisational operation policies and structures. Leaders in such condition have to coach and train people to meet the changed structure. Moreover, the framework has to be simple so that the employees can communicate with their leaders (Turner, 2009). Conclusion From the study, concept of management and leading strategic changes in the UK based banking organisations are outlined. It has been observed that the leaders of the banks have to recruit people, identify training needs of employees, execute disciplinary and complaint policies so that strategic change can be effected with smooth transition. It can be said that the UK based banking sector will be facing challenges like cyber crime and cross cultural change related factors. Thus, such organisations are using key components for leading and managing strategic change into the service provisions and employees. From the study, it has been observed that main competencies of change leaders are proper attitude, effective knowledge and relevant skills. Moreover, characteristics of future banking sector leaders are explained in the study. Finally, competency framework of developing leaders is outlined in respect to the banking service related strategic change. Reference list Emmerson, C., 2010. Banking on change (UK governmentÂ’s budget options). Strategic Direction, 26(6), pp.171-179. Flamholtz, E. and Randle, Y., 2008. Leading strategic change. Cambridge, UK: Cambridge University Press. Grundy, T., 2004. Rejuvenating strategic management: the Strategic Option Grid. Strat. Change, 13(3), pp.111-123. Gupta, P., 2011. Leading Innovation Change - The Kotter Way. International Journal of Innovation Science, 3(3), pp.141-150. Gupta, V., 2011. Flexible strategic framework for managing forces of continuity and change – study of inward supply chain of a leading automotive company in India. International Journal of Business Excellence, 4(2), p.142. Gupta, V., 2012. 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