Strategic change management at the Citibank
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Published: Wed, 10 May 2017
Citibank, a major international bank, is the consumer banking arm of financial services giant Citigroup. Citibank was founded in 1812 as the City Bank of New York, later First National City Bank of New York. As of March 2010, Citigroup is the third largest bank holding company in the United States by total assets, after Bank of America and JP Morgan Chase.
Citibank has retail banking operations in more than 100 countries and territories around the world. More than half of its 1,400 offices are in the United States, mostly in New York City, Chicago, Los Angeles, the San Francisco Bay Area, and Miami. More recently, Citibank has expanded its operations in the Boston, Philadelphia, Houston, Dallas, and Washington, D.C., metropolitan areas.
In addition to the standard banking transactions, Citibank offers insurance, credit card and investment products. Their online services division is among the most successful in the field, claiming about 15 million users.
As a result of the global financial crisis of 2008-2009 and huge losses in the value of its subprime mortgage assets, Citibank was rescued by the U.S. government under plans agreed for Citigroup. On November 23, 2008, in addition to initial aid of $25 billion, a further $25 billion was invested in the corporation together with guarantees for risky assets amounting to $306 billion. Since this time, Citibank has repaid their government loans in full.
Citibank was one of the first U.S. banks to introduce automatic teller machines in the 1970s, in order to give 24-hour access to accounts. Customers could use their existing Citicard in this machine to withdraw cash and make deposits, and were already accustomed to using a machine with a card to get information that previously required a teller.
In April 2006, Citibank struck a deal with 7-Eleven to put its automated teller machine (ATMs) in more than 5,500 convenience stores in the United States. In the same month, it also announced it would sell all of its Buffalo and Rochester, New York, branches and accounts to MHYPERLINK “http://en.wikipedia.org/wiki/M&T_Bank”&HYPERLINK “http://en.wikipedia.org/wiki/M&T_Bank”T Bank.
Change Management is a set of process of an individual is been moved to another process for making the success or to achieve the objectives of the organisation. For eg If a person works in india is an process expert if the company wants to start a new branch in America. Then what the company should do? The Company should take a fair decision by moving the employee from india to America. So that he is aware of the process and he select the skilful person who is worth for this project. So change in the world is common and good for the surrounding as well. But the change should make profit for an organisation objectives.
Strategic change management is an intergrated process in the organisation by creating the strategy and implementing in to work activities. By implementing we need to monitor the activities work done by the employee so based on the regular check we can make a change to the organisation as well as it will increase the economic growth of business.
Change management is a well structured designed approach by interchanging the person or team from a current state to a desired state or company wants him to go for a particular state to accept the current change in business environment for the growth of organisation.
2.1 Need for Change:
The Changes are happening in the organisation of both external and internal issues. The following issues of point are below:
- Drastic change in the global market growth
- Changes in economic downturns
- Serious changes in business strategy
- Technological changes in business
- Expanding business widely
All Organisation have to make their own changes, otherwise they will be moving in the same tempo, they cant achieve more what the other does. So strategic changes is something very essential for a business success. To mee the challenges definitely the organisation needs a change from both the external and internal environment
Citibank as a private are facing some of the challenges, the following below changes are below :
Economic downturn : Everyone is aware the global market is in a serious crisis position now. In this situation badly affected country in America and Europe. Because of Lehman brother bankrupt the company finding a hard position now. Lehman brother was 4th largest investment bank in the USA, because of the bankruptcy the America is in a critical situation. This should not happen to others banks, So because of this every bank is using new strategy to overcome with this situation. This economic downturn made a great collapse on banking sector.
Competitive pressure : India is the second largest population in the country. In india we can find many private banks to its best and they give the service to the custome is also outstanding. Now this is the time every bank should use the strategy to bring customers with our bank. So the Citibank has started a new facility by transferring the funds to other banks by NEFT. This was not introduced in the othere banks. So everyone attention has turned to Citibank. So this is there we need to implement the strategy and make successful. So this would create a competitive pressure to other banks.
Technological Development: In last few years technology has been developed a vast and it helps in many ways for us. Some of the banks don’t have facility of transferring the funds to other person for the same bank he has the account. We can transfer the amount but it will take one day for registration then we can transfer the money. Citibank has came up with new strategy by with in a minute money will be transferred to the account. If we had that person in to the payee list. Because of the technological development it make very easier to the customer.
Planning for extension: Citibank atm has lot of branch over Chennai and Mumbai cities, as a feed back from customers they have opened lot of atms for customers welfare. So by creating a wide extension they can retain their largest market position.
Stake holders demand: Its nothing but who participates in the organisation by directly or indirectly. Directly means those who have invested the money in the organisation. Their demand is like company should earn profit and they have to top listed in the global market. Indirectly means customers, their demand is like online services, atm services, deposits and payment in online. So this will motivate the bank for change.
2.2 Driving Factors that influence the change:
Changes does not take place in every short while, There are some important driving factors which plays to be an important role for change in the organisation. There are two parts of factor external and internal.
External Factors : The External environment factors are of two different types the general environment and task environment.
External Environment :
The general environment of organisation are listed below:
Political changes and implementation of a new government
Current economy changes such as rising down of stock market and exchange rates
Technological change which may affect the human life in both products and process
Legal implication of new government polices
Clearly these factors are apart from influence in change in the organisation.
Definitely the organisation will over come the challenges would do well and anticipate to these development as they translate directly or either a threat that must overcome an opportunity.
Internal factors play a major role for changing in an organisation. These factors are driving the change and make the organisation support for achieving the objective.
Change of Management: Each and every organisation make a change over the chief executive officer after some years of service. When a new chief executive office comes in to the organisation make some new strategic changes to the organisation.
Financial Issue: Generally every organisation want to make the budget competitive for the project. They need the output result to be effective in minimum budget. This is what every organisational objective. In some times this wont work out in some of the projects, in this case they will make the change to cut down the budget amount.
Technological Development: In this modern world everyday a lot of new inventions have been invented new by the scholars to promote the business, make the life convenient and comfortable. Organisation can advertise their business by the technology they can use the opportunity and competite others.
In case of Citibank, have some of the factors which driven its change in the last few years.
Economic Downturn : In the global recession Citibank has been badly affected for eg Citibank back end BPO projects have been outsourced to india in the name of Citigroup global services, once the recession affected the market as well as the bankrupt of lehman brothers as affected the America badly. At that time citigroup has been acquired by TATA CONSULTANCY SERVICES. Otherwise it would be difficult for the organisation to continue their business.
Political issue: Generally according to the new government rules and regulation, the bank will adhere to the policy and make a new strategy according to the new legislation.
Technological Development : When comparing with other bank always Citibank at the top. Their service is outstanding eg online service is user friendly to the customers. They make use of the full technology development.
Customers expectation : Citibank always fulfil their customer needs. Eg they provide sms service to pay the bill or to know the outstanding amount of the bill. Apart from that they are doing extra services like paying the mobile bill, electricity bill etc.
Demographical situation : Citibank has lot of branch in india and other main cities like Chennai and Mumbai, So they have the plan to open the brach in remote villages of citi for the benefit of the customer request and the feedback. This will creat a extra ordinary change in socio economy of india.
Pressure from the rivals: Generally in india there are lot of private banks which is very competitive, Citibank has done many strategy changes to make the bank as unique, for eg. Those who lend the money for mortgage, the citi has came front and offer loan in an attractive interest to the customers.
The above factors discussed here which plays the major role for change in the organisation. I have not listed down all the factors. Whatever the factor that is not important, organisational change is the process which is related to growth of the organisation. Its failure or success but the change is very important to the organisation to achieve the organisational objective.
2.3 Resource Implications : Resources are the major factors of the organisation. The better resources can bring the revenue and opportunity to the organisation. Organisation use different resources to achieve their goals. The major resources used by the organisation are described below :
1. Human Resources
2. Financial Resources
3. Physical Resources
Human Resources : Human resources is the most important resources in the organisation. They maintain all other department in the organisation like, admin, cafertaria, marketing, supplier etc. HR team is the one who recruit people for other department. If a new process comes to the organisation they are one who recruit people according to the criteria of the process. HR team facilitates other roles in the organisation like employees needs and trainings etc. To achive the organisational goal change is much needed for organisation.
Financial Resources : Finance is very much important to the organisation, with out that nothing can be done. For each and everything we need finance. Eg to give training to employees and induction to new people for each and everything we need money. So the company will focus on finance, they need a good output with minimum budget. In the recession period many of the banks have faced the problems. Some of the banks have reduced the salary of the employees of the bank.
Physical Resources : Physical resources support the human resources department to do the job properly in a right way. For eg human resources cannot do all the work with out proper physical resources. Infrastructure, transportation, machine are coming under the physical resources which can help for human resources and together they can achieve for organisational growth.
3.1 Systems of involving stakeholders:
Stakeholders are the people who have interest in the organisation or have influence or power over it. For changes in the organisation stakeholders plays a major role. The internal stakeholders have more power and more interest. Some have low powe and high interest. Stakeholders support is very essential to organisation with out their support changes is not possible.
The Key stake holders may divide into two categories:
Internal Stakeholders : Internal stakeholders are people who work inside the organisation is called internal stakeholders. For eg customer, employees and management. They are the most effective to the changes happening in the organisation.
External Stakeholders: The people who are outside the organisation are called external stakeholders. For eg supplier, buyer, government etc.
Stakeholders of Citibank: Citibank stakeholders play a major role in changes of organisation. They are the one who accept change and make it successful. With out them changes is not possible. They have to accept the change so that we can achieve our organisational objective. The stakeholder of Citibank can describe as following:
Investors : The investors of bank is vey important. In that stakeholder is the investor. So he is more important to organisation. So they have the full influence to changes in the organisation.
Employees: Employees of the organisation plays a major role in change of organisation. When the changes need to the organisation, the direct support comes from the employees to change or resist the change. All the employees of the bank in the organisation are key stake holders of the organisation.
Management: Management is solely responsible for the growth of the organisation. They are the one who implement the strategy and implement in day to day activities and make success for the organisation.
Customers: Cutomers are the asset to the organisation, when the changes place in the organisation customer focus to the organisation. As well as bank is very keen on customer when the change is going on.
Share holders: Shareholders are the owner of the organisation. The bank gives high priority to the shareholders, with out their decision the bank cannot change anything in the organisation. Shareholders have high interest and high priority in the organisation.
Community: Community is something very important, bank have to look around whats happening because some of the muslim banks are giving interest free as that is religious to them. So like that we need to give low interest of mortgage to customers, so that customer attention will turn around.
Government: Government is one type of stakeholder in the organisation. Because we are paying corporate tax to the government as well as they have the strong power on the business. Bank obeys legislative roles made by the government.
Stakeholders of the organisation has every power to change in the organisation and implement the change in day to day activities. Once the stakeholder gives the suggestion, management will think about the change and implement the same in to organisation. The stakeholders have more privilege to occur the change in the organisation as they have more interest in the organisation.
3.2 Involving stakeholders in the change management strategy:
Involving stakeholders in the strategy change is depend on the realationship between the stakeholders and the organisation. The steps involving stakeholders are below:
Identifying their interest in organisation
Identify the output strategic challenges
Graph the relationship between
Recongnise the important stakeholder from the organisation
As per mendelows matrix the stakeholders of categorisation is described below
High power + High interest = Investors, Executive body
High Power + Low interest = Government,
Low power + High interest = Employees, shareholders
Low power + Low interest = Customers, community
3.3 Evaluation of the systems used to involve stakeholders:
Change in the organisation will be success only if we regularly do the audit check on that particular changes. So we can be aware of whats happening because the impact of failure of an effective change can be very high, losing in market, changing in senior management, losing of employees.
In the recent Citibank has made a major changes in the organisaiton : They have message services, online services those who lend the money for mortage is very low interest to the cutomers. By implementing this changes they have used some methods to involve its stakeholder in the change management strategy.
Meetings : Citibank has arranged meeting with his stakeholders to share the view of change in the organisational strategy
Coaching: Citibank is regularly monitoring the employees. If an employee sticks in to the same process for two to three, years the employee will feel very bored to work, so he needs a change, so the organisation will come front and give coaching about the other process, so that employee should be ready to accept the change.
Delegating: Its one of the methods to involve the stake holders in the change management process. The management can assign some of the task by dividing between the team to delegate the work properly. This will make a huge change process in the organisation.
Presentation: It is one of the useful methods to understand the stakeholder. The bank will set up power point presentation and make them understand what we are doing in the organisation. So that stakeholders are aware of what we are doing in the organisation.
3.4 Resistance to change
Resistance to change can be defined as an person or team engaging in acts to stop or disrupt an attempt to introduce change. Resistance itself can make different forms from undergoing of change initiatives in the organisation.
Two types of resistance can be considered:
Resistance to the content of change : A change in the technology or innovative to a particular reward for recognition.
Resistance to the process of change : This type of change is for the affected employees. With out prior information a job is been assigned to the employees. After management knows they go for a change in the organisation.
Steps should be taken to manage the resistance of change in the organisation :
Management should be aware of whats going around in the organisation, because change in the organisation is something is not very easy to change. First the management teams go for the discussion and comes to the conclusion what should be implemented or not in the organisation. Then again they have to set up the meeting for the stakeholders, we need to explain the advantages of the changes in the organisation to shareholders and make them understand. At last we have to convey the changes to the employees.
We conclude for whatever the changes might be in the organisaiton. And what ever the reason the changes have made necessary to implement in the organisation. The changes in the organisation is very much effective to achieve organisational objectives.
Models of Strategic Change:
There are many models of strategic change:
7S Model – Mckinsey
Five stages transition circle – Kulber – Rose
Eight steps to successful change – John p kotters
Change management model – Kurt luwin
Casual Change model – Burke – Litwin
7S model of Mckinsey : The 7S model can be used in a variety of situation where an alignment perspective is useful, below are the following examples:
It helps to improve the performance of the company
Managers are willing to examine and learn its intention and reason and execute the model
It will help to create a great business
Strategy : Plan for allocation of a firm scarce resources, overtime to reach identified goals.
Structure : The organisation is well structured and centralized.
System : Day to day work in organisation and procedures should be follow employee
Shared Values: This deals a major value to the company that influence the corporate culture and the general work in organisation.
Style: The key role of manager is adopted in the organisation.
Staff: Number of employees in the organisation.
Skills: Highly skilled employees are working in the organisation.
The Mckinsey 7S model involves seven interdependent factors which
are categorized as either hard or soft elements:
Hard elements are Strategy, Structure and System.
Soft elements are Shared values, skills, style and staff.
“Hard” elements are easier to define or identify and management can directly influence them: These are strategy statements; organization charts and reporting lines; and formal processes and IT systems.
“Soft” elements, on the other hand, can be more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful.
Placing Shared Values in the middle of the model emphasizes that these values are central to the development of all the other critical elements. The company’s structure, strategy, systems, style, staff and skills all stem from why the organization was originally created, and what it stands for. The original vision of the company was formed from the values of the creators. As the values change, so do all the other elements.
1.2 Evaluations of relevance of models of strategic change:
Organisation is making changes according to the current situation and current economy. There are so many models in strategic change but we cannot implement all the strategy in to the organisation. We need to implement the correct strategy in a right time to execute the success of the organisation. Among the other models of strategic change Kurt Lewins model is used in most of the cases.
Organisation should use this model for strategic change for organisational development. For a change organisation should change the chief executive officer and the managing director for achieving the organisational objective. So that new managing director introduce new online banking service and atm service. At the beginning the employees wont accept the change. But later on we should tell the advantage of the changes in to the organisation. Then the new executive of the bank go for a change to manage the organisation.
First the bank should arrange the meeting with the branch manager and the whole employee of the organisation and the backend team. And they should make understand the changes and benefits to the organisation. When the managers understand the importance of change in the organisation, then they will cascade the message to the employees, in this way all the employees will ready for the change and move for their comfort zone.
Secondly the management should be aware of changes is very important in the organisation. This stage of change is needed when the situation arises for the organisation. The changes will make the employees training, mentoring, groupdiscussion, so that employees could learn the changes and implement in the work.
At the end change has been made now the managers and employees together should perform and achieve the goals of the organisaiton.
1.3 Assessment of the value of using strategic interventions techniques in organisations :
The field of organisation using a variety of processes, approaches, methods, techniques, applications to address organisational issues and to achieve the organisational objective and to increase the performance of the organisation.
Human process interventions:
With today’s strong importance on human values. The following interventions are getting a great deal to the organisaiton. And that will change the organisation to different reach over the customers. The human process will do a project and make them understand the benefits of change over the organisation. The following interventions will be helpful to change the projects in the organization. New employees, different cultures working together, many complaints among organizational members, many conflicts, low morale, high turnover, ineffective teams, etc.
Leading in front
Built the team
Self directed work teams
These strategic change interventions will make a huge change in the organization. The organization arranged training for the employees and they should monitor the self evaluation of the employee. This will make the change in operational system successfully.
4.1 Develop appropriate model for change:
Today organization face rapid change like never before, Globalization has increased the market and opportunities for growth and revenue. Ability to manage change to meet the stakeholders needs is very important by todays leaders and managers.
Step one: Create urgency
For change to happen, it helps if the whole company really wants it. Develop a sense of urgency around the need for change. This may help you spark the initial motivation to get things moving.
Identify potential threats, and develop scenarios showing what could happen in the future.
Examine opportunities that should be, or could be, exploited.
Start honest discussions, and give dynamic and convincing reasons to get people talking and thinking.
Request support from customers, outside stakeholders and industry people to strengthen your argument.
Step Two: Form a Powerful Coalition
Identify the true leaders in your organization.
Ask for an emotional commitment from these key people.
Work on team building within your change coalition.
Check your team for weak areas, and ensure that you have a good mix of people from different departments and different levels within your company.
Step Three: Create a Vision for Change
A clear vision can help everyone understand why you’re asking them to do something. When people see for themselves what you’re trying to achieve, then the directives they’re given tend to make more sense.
Create a strategy to execute that vision.
Ensure that your change coalition can describe the vision in five minutes or less.
Practice your “vision speech” often.
Step Four: Communicate the Vision
It’s also important to “walk the talk.” What you do is far more important – and believable – than what you say. Demonstrate the kind of behaviour that you want from others.
Talk often about your change vision.
Openly and honestly address peoples’ concerns and anxieties.
Apply your vision to all aspects of operations – from training to performance reviews. Tie everything back to the vision.
Lead by example.
Step Five: Remove Obstacles
If you follow these steps and reach this point in the change process, you’ve been talking about your vision and building buy-in from all levels of the organization. Hopefully, your staff wants to get busy and achieve the benefits that you’ve been promoting.
Figure: Force field analysis
In the above figure, we see that there are some forces which want the proposed change called driving force
Firstly identified these both forces to implement change in right way. Then it arranged sitting with the restraining forces to develop a sense of urgency into them and use the driving forces to motivate the opposition rather than contradiction.
Secondly the bank found some powerful people who positively support the need for change. It formed coalition with authority, delegation, status and expertise. It also ensures the team to have a good mix of people from different levels and different areas.
Finally, it developed a sense of need of change in all kind of stakeholders of the bank e.g. customers, employees, directors, investors, community and others. It also introduced reward people for making change happened.
4.2 Plan to implement a model for change:
Organisations use some tools to implement a model for change. Organisational development, business process re-engineering, delayring and rightsizing, push and pull strategy are the most common tools used for implementation of change model.
Business process re-engineering: Business process reengineering (often referred to by the acronym BPR) is the main way in which organizations become more efficient and modernize.
The two cornerstones of any organization are the people and the processes. Even the act of documenting business processes alone will typically improve organizational efficiency by 10%.engineering transforms an organization in ways that directly affect performance.
1) Envision new processes
2) Initiating change
3) Process diagnosis
4) Process redesign
6) Process monitoring
The most common approach to process improvement is to take an under-performing process, which is key to achieving the business objectives, and set about a systematic analysis to determine the most important areas for overhauling. These are then tackled on a project-by-project basis. The analysis and improvement is tackled by a temporary Process Improvement Team drawn mainly from people within the process.
We may conclude the point in this way that organisations need to use techniques before implementation of any change. Otherwise it may bring disaster for the organisation by resistance force to change. It also recommended that various tools or techniques may be used in integrated way for implementation of change in the organisations.
4.3 Appropriate measures to monitor progress:
Effective change is needed to monitor the progress of change. Monitoring the progress of change is most important for effective change. Change is a process, where there might be some wrong with people and some wrong with process. Change does not take place without proper monitoring over the process. Managers are required to keep an eye on the ongoing change and the reaction of this change. The evaluation of change progress can divide into following categories.
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