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'Change management', as defined by Brightman& Moran (2001) is "the process of continually renewing the organization's direction, structure and capabilities to serve the ever changing needs of external and internal customers". Similarly the tactical approach to start the change process in the structure and culture of an organization in competitive environment is change management. Change is inevitable in new economy environment for the survival of an organization.
After globalization economy is experiencing new trend of information technology. It has changed the norm and nature of business. It is vital to know that how the change effects on work process in the organization (Toolbox, 2010).
Organization Overview and Background
Financial institutions of any country are considered back bone of economy growth. A Strong banking system guarantees for the economy growth, running of trade and responsible to hold the financial position of the country in right track.
The banking sector of 59 countries experienced process of reconstruction during the last two decades to enhance liberalization. Similarly, during 1990s the financial reforms in Pakistan started in banking sector.
Management changes in Habib Bank Ltd during 2004 have great affected the performance of the bank to cope with the challenges of globalization
The change was necessary to eliminate conflicts and overcome key problems of structure. HBL has intention to reduce its employees from 31000 to 27000 with the help of new policies (Ahmed and Burki, 2008).
HBL was established in 1941, the prime bank in country with 1439 branches to provide financial need and other facilities to the business community. The first branch of HBL started functioning on 30th August 1941,where the founder of Pakistan Quaid-e-Azam Muhammad Ali Jinnah opened his account to show confidence on new born financial institutions, has been privatized by the Government of Pakistan to Aga Khan Fund for Economic Development (AKFED) with 51 percent of share.
"To make our customers prosper, our staff excel and create value for shareholders"
"Enabling people to advance with confidence and success".
The economic conditions and policies of economy growth are also affected by the bank policies. Before privatization HBL was influenced under the government control. The reconstruction of HBL was to make it independent financial institution. It became challenge for HBL to implement effective change management procedures to reduce ambiguity and uncertainty among stakeholders.
Objectives of HBL
The main objectives of HBL are;
To earn profit for both stakeholders and bank.
To promote business activities and offer employment.
To enhance development in industry of country.
Significance of this study
New business environment has changed the norms for smooth running of business in an organization. For the success of business strategy during change process effective change management practices are inevitable.
My study aims and goals are;
To study structure, environment and culture of an organization.
To examine job satisfaction.
To examine challenges and different issues of change management.
Structure of an Organization
The President and Executives committee look after the affairs of one central, 23 Regional offices and 1439 branches all across the countries. The Chief executive with the assistance of General Manager Operation and General Manager Support Services control the branches of their respective area.
The functional responsibilities of the banks are divided into 7 categories;
International operation group
Credit policy group
Assets remedial management group
Project finance group
In addition to above structure, the president also manages international operations and vice president supervises all functional groups.
The shift of bureaucratic organizational change brings radical changes to upgrade work for organize change at work place. The bureaucratically approach brings revolution to improve performance at work place by reducing the favouritism in the industrial relation and control over employees.
Max, Weber, a German sociologist proposed a style for worker in which they according to their ability find out way of growth which eliminate the personal favouritism in an organizational environment.
Weaknesses of bureaucratic organization
Bureaucracies' organizational style ignores employees' identity and personal growth at work place. Decisions are made individually which reduce the role of employees in decision making process during change management. Improper channel of communication minimize opportunity of organizational success. The traditional style of bureaucracies does not welcome changing condition of new economy in an organization.
Strength of Bureaucratic Organization
The bureaucratic style strengthens the organization in the following ways:
Control and decision of top management lead an organization to success.
Decisions at lower level can be monitored.
Standardization of regulation by controlling employees at work place.
Model of Change Management
The model ADKAR has five elements of Awareness, Desire, Ability and Reinforcement. During change process it's facilitate and assist the organization for smooth change (Hiatt 2006).
The ADKAR change model
It refers to personal understanding about the process of change within the organization. To analyze the risk factors and providing knowledge to workers to overcome these challenges effectively is mandatory during change process.
It represents the personal choice which is affected by change process in an organization.
It indicates the information and awareness about systems, equipment, techniques which are needed for successful implementation of change.
When a person or group demonstrate the ability during implementation process to achieve desire level of performance.
Reinforcement is internal and external support of change by satisfying individuals and appreciation the change process.
Support of Top Management
The role of head of an organization is crucial component for the success of an organizational change. The interest of top management brings confidence and interest in employees. The support of top management leads to commitment by reducing the feelings of uncertainty within the organization.
Lewis (1951) introduced a three phase model that traditional behaviour must be discarded in change process. Through planned change new behaviour can be adopted through participation.
Three-phase Model by Lewin
It is initial stage in Lewin model which proposed that habitual behaviour must be filtered.
Moving refers to shifting of an organization to new structure and strategies.
It ensures the new changes after implementation will not reverse.
A successful change indicates new level of refreezing, discard of old behaviour and follow new approaches. Further more it is suggested that constantly change in an organization affects the performance of an organization but continuously change in an organization is mandatory to improve the performance and growth.
Effective leadership style
In this style leader accomplishes tasks by satisfying stakeholders. The most effective management depends upon leadership role to full fill the expectations and needs of followers. It is anticipated that the style of transformational leadership will be reliable for alliance. Effective leadership has the capability to generate strong relationship and build confidence with the people. The strong bond between leadership and followers lead an organization ahead for success. Similarly effective leadership minimize the conflict at work place by implementing better strategies.
It is observed high ethical standard link with the transformational leadership. It is considered most effective leadership style during change process. Transformational leadership encourages followers by inspirational motivation, individual consideration, idealize influenced and intellectual stimulation. By expressing emotions, followers are motivated in expressive way. Transformational leadership gives direction to employees for sound decision making along with honesty and ethics. The champion role of transformational leadership is t enhance organizational motivation and promote creative ideas among followers for the successful implementation of change process (Ayoko Oluremi & Callan Victor June, 2009).
Challenges to HBL
Competitive advantage is being observed after globalization competitive advantage can be created by giving knowledge to employees at work place. Similarly job performance can be enhanced by introducing learning culture at work place.
The culture of country where HBL exist is different from the world in term of people behaviour, social setup, ethics, norms and values and way of communication. The working trimmings have variation due to some religious aspects (Kwintessential. 2010).the stated culture of country suggested to take care during change process according to norms and culture of people.
Due to lack of technology infrastructure in the country, HBL could not implemented proper information system in the organization. On the other hand lack of IT expert make HBL unable to use of communication technology in early periods of change process to enhance operation.
After the technology development in Pakistan the HBL started change in all sections especially focus were given on online banking to meet the challenges with the new IT trend and employees behaviours.
Communication, job enrichment and learning culture
Communication is the process of exchange of information with the interest to motivate the behaviours of others in an organization. Managers communicate downwards direction through speeches, company leaflets, bulletin boards and company publications.
Stakeholders are the most important source for the success of change process. Clear communication eliminates the element of uncertainty which influence positively on employees' job satisfaction. For internally communication modern means of communication are used while for external communication with the competitors and secondary stakeholders' software applications are used.
Remember change is a process.
Start change in an ascending order
Involve all stakeholders in change process and its implementation
Addressed early to build momentum
Do everything at once
Underestimate the cost
For effective communication team briefing is most suitable method to reduce ambiguity during change process.
Learning culture promotes the skills of employees at work place which benefits the growth of an organization during change process. Culture has strong link with norms, value and individual behaviour of an organization structure. Cultural resistance can be reduced by protecting norms and values of an individuals and adoptive work environment. Cultural empowerment at work place enhances the stability of structure.
Empowerment to employees
Employees are the important stakeholders in change process. Through effective knowledge management applications, the employees should be given opportunity to pay their constructive and positive role in change process. For their confidence they must be given authority in some extent.
Ethics is set of standard which shows positive relationship towards people attitude and behaviours. HBL works with high fair relation in business to show ethical behaviour to maintain standards. No one is allowed to use power for the sake of personal interest and information is kept highly confidential.
Conflicts of Interest
A conflict of an individual occurs when his/her interests overlap with the bank policies. According to bank policies that no one can use his position for personal interest or leave any conflict unresolved. It is suggested that to discuss the conflict immediately with the mangers.
Misuse of Information
It is the moral responsibility of employees to take interest on priority basis which benefits for bank's growth. It is strictly prohibited to use bank resources for personal use which could create a competitive environment. In some conditions when it becomes difficult to distinguish between bank and employees in terms of benefits, the best method to resolve the matter by authorized person of top management.
Confidentially and Protection
Employees are considered backbone of any organization. During operation employees get access to secret issues of bank related to customers or other party. Protection of these assets is responsibility for management as well as employees and it should be used for business purpose. Furthermore it is the personal responsibility of an employee to fulfil the requirement of rules and regulation.
Ethical laws should be clearly defined in the policy which benefits its stakeholders. HBL does not allow its management as well as its employees to indulge themselves unlawful activity. Furthermore unhealthy activities against policies of bank are discouraged. A boundary compels the management and employees to work or deals inside it.
SWOT Analysis of HBL
HBL is considered sound bank amongst financial institution if the country.
A capability that enables HBL to implement its strategies more effectively.
Personal attraction of employees with the customers in friendly environment.
Reliable internal communication system for easy to operate.
Maintenance of data properly and with security.
HBL is the largest commercial bank in the country with international branches.
Oldest bank in the history of Pakistan with richest experience.
Focus is given by lucrative schemes and services according to needs and demands of the customer.
Human resource development and innovation in online banking.
Potential to meet the challenges in the competitive environment in new economy growth.
Difficulty to manage carefully every branch because of its wide network all across the country.
Poorer system of recovery.
Uncertainty of job satisfaction.
Inconsistency due to largest of branches.
Fear of down sizing at low profitable branches.
Sense of insecurity by victim of political and socio-cultural pressures.
Lack of professionalism due to knowledge management.
Market potential in consumer banking.
Opening of ladies banking section is new idea to attract customers.
Combination of corporate banking with value added services.
Positive policies of government towards banking sector which enable HBL to assists its customers by offering financial facilities.
Promotion of IT by government through which HBL has an ability to improve its technology infrastructure in order to facilitate its customer more effectively'.
International network focuses on trade finance to enhance trade activities with the international market.
Customer feedback improves the bank performance and assists the bank for future policies.
New trend of e-banking can flourish the banking sector.
HBL is providing opportunity in promoting leasing business.
Consolidation in banking sector.
The threat of inconsistency .
Growing global technology advancement.
Strict regulation over credit facilities by the government.
Foreign banks which are flourishing in consumer financing in local market creating competitive environment.
increasing operation of private banks all across the country.
Highly attractive salaries for competent skills workers and advance customer services by foreign banks.
PEST (Political, Economical, Social, Technological) are core drivers to change which help in identifying external forces as well as internal forces. Internal issues are difficult to diagnose where as external issues causes a shock for an organization during change process.
It is mandatory for any organization to consider its environment from all aspects before taking any initiatives. Three main environments have great influence over any organization:
The internal environment which refers to wages of employees, use if IT infrastructure and culture enhancement.
The micro environment includes competition or customer services facilities all across the country.
The macro environment is know as PEST (Political condition, Economical condition, Social condition and Technological condition) factors which are described below:
Political condition is not mature in Pakistan but every government has positive policies towards banking sector as these financial institute support government financially. Unstable political situation in the country caused the huge fluctuations in governmental policies.
The change in management in banks do not affects only bank but all economy sector of the country. The level of inflation is being observed high in Pakistan for the last years. To fulfil basic needs of life like housing etc, people take support from financial institution.
The world has become global village. Modern means of communication and rapid changes in economy growth influences the lives of people. The trend of conventional approach of banking system has changed with the modern approach of e-banking system.
Technology is important element in competitive advantage. Internal communication system enhances the data security and smooth flow of work in bank.
Changes and different Issues
Human capital gives competitive advantage edge in an organization .the individual resists may fail the change process.
Customers are vehicle of change and involving them in change process goals are achieved successfully. Satisfied employees win the loyalty of customers in corporate world. Dissatisfaction in employees results in dissatisfaction in customers. It is mandatory during change process that employees must be involved in decisions making process. Employees will show positive attitude if they feel secure in the process of change management.
During change process new policies may confuse and even enrage employees. The employees resists against change process for the fear of job insecurity which is considered representative mark at work place. Positive attitude of management brings confidence in the behaviour of employees which smooth the process of change (Smith 2005).
Resistance to change is natural process and it should not be observed as negative. Similarly people who directly affect from change process, resist most .To eliminate the level of management and political issue the role of expertise is vital during change process.
Active resistance at work place refers to poor communication and rumours during change process whereas passive resistance refers to employees' cold attitude towards objectives and goal of an organization.