The Impact Of Change On The Organisation Business Essay


Beer and Nohria (2000 p.1) argue that "70% of all change initiatives fail". In another article they claim that very often the change programs, due to their standardised set up to solve all the pain in one step, achieve exactly the opposite as they do not speak to particular organisational units. In literature, a certain criticism is found, towards generalist approach to change and usage of buzzwords such as "participation", "excellence" or "leadership". Beer et al (1990) state that big slogans can not substitutes for in-depth understanding of the business. It is important to analyse that statement and identify factors that decide about the success of change initiatives but also to understand change as phenomenon both in human as in organisational sense.

In the ever changing economic environment, managers have a very difficult task to design and follow cutting-edge change programs that could be successfully implemented and could be translated into international context in which global companies operate. In addition it proves difficult to sustain changes once they have been implemented. For many global players it in an inevitable but very difficult task to change and transform, and it often creates tension and puts companies at risk.

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Allianz Global Corporate and Specialty (AGCS) is a chosen research organisation for the purpose of this study. The subject of change has been in the field of author's professional path, which has been given a mandate to support creation of a Change Implementation Department within Allianz Global Corporate and Specialty. In the scope of that given mandate, the theories and practical usage of common change frameworks will be critically assessed in order to contextualize generic change frameworks into a bespoke model, fitted for the context of the research organisation. After presenting the history of AGCS, an analysis of currently running Global Change Program within AGCS will be undertaken in order to showcase the status quo and use it as a basis for improved, customized change model.

The stabilization of Global Change Program (GCP) has been given a strategic importance as a set target for 2013; hence the Organisation and Business Transformation (OBT), the department responsible for the delivery of the Program, has recognized the necessity and tactical importance for the formation of a dedicated Change Implementation Department within its organisation.

In addition, AGCS is undergoing a large wave of change programs such as setting up new internationally operating entities, introduction of matrix structure and implementation of new legacy systems and new IT landscape. The heterogeneous organisation structure is often a cause for many issues and is told to carry the responsibility for creating silos, which can hinder successful and timely implementation of change programs. The cultural aspect plays significant role in the transformation of AGCS.

This paper will analyse chosen change approach on an example of Global Change Program, initiated shortly after the inception of the company. The impact of newly introduced matrix structure as well as cross-boarder expansion will be taken into consideration only for selected milestones, especially when corporate culture will be analysed. The behavioural and human aspect of change within globally-operating company as an integral part of most change frameworks and programs will be taken into dual analysis between change program implementation based on systems and cultural organisational change process that contributes or hamper organisations on the evolutionary path.

Few selected popular change management frameworks will be critically analyzed in order to find commonalities with GCP and choose most suitable dimensions for creation of contextualized change model for AGCS. It will be argued that all change programs produce change; it is however not measured whether the change has been positive or negative, as the importance of post-implementation review are often not seen as integral part of change management cycle. This paper will hence introduce new change model designed for a particular company context (AGCS) in a consulting manner.

After the literature review and the analysis of status quo within the research organisation, the bespoke model suggests entwining and expanding on elements of integrated model of Theory E and O, widely discussed in the modern change management literature. The ultimate goal of this study is to put the company into the new change context and help streamlining future change initiatives by implementing customized change implementation model. It is further important to institutionalise such model and Change Implementation Department, a strategic step that the organisation has recognised as important, especially taking into consideration the remarkable growth and international expansion of the company in its short history.

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This paper will analyse current situation within the company and particularly the OBT and propose a context-fitted change model for an industry insurance company, after collecting primary data and undergoing the analysis of selected secondary data. As in every organizational transformation, the persona of a CEO is crucial for the ongoing support and direction of change but also for giving strength and motivational support to those who are responsible for delivering change programs as well as those impacted by current and future changes.

For the primary data collection two methods have been chosen: semi-structured interview with the company's CEO and employee survey. The CEO of AGCS Axel Theis, has been interviewed regarding his view on current change program and his outlook regarding strategic orientation and importance of appropriate change approach for the company. The findings will be utilised into final design of a bespoke change management.

It has been recognized that despite a large choice of existing change models and framework; there is not one solution that will fit all; hence a fitting change model for particular context and point in time is recommended. Further, a regular review of the status of change progress is beneficial in order to implement contingency plan as soon as red flags are raised. A risk monitoring and recognition mechanism will be considered for incorporation into the bespoke model.

Successful companies of today develop "a culture that just keeps moving all the time" (Rosabeth Moss Kanter Strategy and Business 1999). A structured change management program requires a corporate culture to go along, which has proven to be difficult tasks for a young company such as AGCS.

Despite the fast speed of today's markets and their pressure on its participants, it has to be acknowledged that change programs require long time and increasing the speed of change can only harm and reverse the process, especially when cultural aspects are key success factors for the accomplishment and delivery of change.

2. Review of selected change management frameworks and the impact of change on the organisation

The phenomenon of organisational transformation has been discussed in the literature and practice for many decades. Many frameworks and change models exist and are being applied by corporate leaders in local and global markets. Regardless of the multitude of existing methodologies, Change Management universe is dominated by few frameworks that gained most recognition of business leaders and have been adopted by companies on a wide scale.

Before starting the analysis and review of existing change frameworks, it is advantageous to look at the change curve and emotions that changing circumstances can evoke in individuals. The change or mood curve has been widely adopted in the business and project management world in the last fifty years since it was introduced by Elisabeth Kubler-Ross. The original aim of the curve was to explain and visualize grieving process in terminally ill patients [1] . The curve explains, in stages, the behaviour of individuals and emotions they associate or experience with drastic changes of life or work circumstances.

Figure 1.0 Adopted change (mood) curve based on Kubler-Ross (1969) and Adams, Hayes and Hopson´s (1976)

Moving along the curve, it has been recognised that individuals experience different sensations in regards to changing (work) environment. People faced with change, are likely to show tendency to deny it as a primary impulse. In the next step, individuals tend to feel angry and ask question "how come?", "why now?", "why me?" etc. The next stage is bargaining, in which the person is looking for remedy in the situation, an escape. After it becomes clear that changes are inevitable and are going ahead in the initial scope, individuals may fall into depression. After the acknowledgment, that negative emotions or reluctance will not help the situation, individuals tend to enter the positive stage and accept the new circumstances, even embrace them and participate in the change initiatives (Cameron, Green 2004 p.28). Adams, Hayes and Hopson´s (1976) added three additional dimensions to the mood curve: experimentation, discovery and integration. The individual recognises positive effects of the change and is willing to engage, to experiment and finally integrate in implementing new status quo. In this stage it is important to allow individuals being part of something new, something positive.

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The curve is important insofar, to recognise that each change initiative will have a significant impact on the individual as part of an organisation. Further, each transformation undertaking will draw a specific change curve with different dips and hence a targeted communication shall be developed for each stage of the curve using correct tools fitted for particular audience. It is hence important to know, which stakeholders will be most affected by planned changes and to prepare them in advance in order to avoid or lessen negative emotions along the change curve. The sooner all relevant stakeholders embrace changes, the more likely the initiatives is to succeed and leave sustainable impact.

In this chapter, a comparative review of selected change frameworks regarding similarities in their assumptions will take place in order to identify core success factors for the concluding model. In the next step, the identified success factors will be contextualized and used as a road map for designing of a bespoke change model for the research organisation.

The work and observations of Dr. John Kotter and his eight-step model (see Table 1.0) are well-fitted to start the review of existing change models.

Table 1.0 Adopted Kotter´s eight -step model in Cameron, Green 2004

Kotter´s eight-step model provides a good structure for approaching change before launching a particular program. The specific activities and tools that can help achieve these outcomes can vary dependent on the scale of the change to be delivered and have already been adopted for the purpose of AGCS in the lower part of Table 1.0. Cameron and Green (2004) criticise the linear progression of Kotter´s model and potential risk of loosing the core messages from the burst of energy at the start to delegation and distance in closing steps. They promote a cyclical approach to change and this model is also, what the author considers well- fitted to the situation at AGCS (See Figure 2.0). Continuity without reinventing the wheel but also engagement from top-down and bottom-up are the means to success and long-term results.

Figure 2.0 Change cycle with dual input (adopted from Cameron, Green 2004)

The success factors identified in this adopted model are: continuity and consistent management and change agents attention for the progress as well as valuable input from bottom-up. In addition, the importance of lucid and motivated change team is stressed out in the model (see red-market fields in Figure 2.0). Another advantage of this framework is the monitoring and consolidation step. This will help to react to potential risk that can arise during transformation process. This part of the model will be further analysed and expanded in chapter 5.

Beer and Nohria (2000 p. 2) claim that majority of change initiatives are based on or show similarity to Theory E or Theory O. In Theory E or the "hard" approach, change is based on pure economic value; in Theory O, the organisational capability builds the core factor in transformation process. Leaders endorsing the "soft" Theory O approach believe in development of corporate culture and in organisational learning.

Both theories correspond with the management theories described by Ansoff, Bosman and Storm (1982 p. 5). The authors classify following management styles in strategic change: coercive, which aligns with Theory E; the learning approach, which supports Theory O. Ansoff et all (1982) also list crisis approach, in which management, often unprepared for the emergency, becomes part of the problem rather than its resolver. In the final model a crisis and risk mitigation tool will be integrated into the bespoke change model to avoid or alleviate the risk potential and its consequences (See Figure 12.0 in Chapter 5)

Extending upon the Theory E and O, Beer and Nohria (2000 p.4) list six main dimensions, on which business transformation can be based. Those six dimensions have been selected to serve as foundation for the final success factors selection for the customized model (See Table 2.0).

Table 2.0 Contextualised Theory E and O, and integrated model based on Beer and Nohria (2000)

Dimensions of Change

Theory E

Theory O

Integrated Model (Theory E+Theory O)

AGCS context


Maximise shareholder value

Develop organisational capabilities

Embrace the paradox between economic value and organisational capability

Aim for organisational strength to deliver on strategic financial goals


Manage change from top-down

Encourage participation from bottom up

Set direction from the top and cascade down the hierarchy

Set direction from the top and cascade down the hierarchy. CEO taking a role of active change agent. Support innovation on periphery.


Emphasise structure and systems

Build up corporate culture

Focus simultaneously on the hard e.g. structure and soft e.g. culture aspects

Focus simultaneously on the hard e.g. structure and soft e.g. culture aspects


Plan and establish programs

Experiment and evolve

Plan for spontaneity

Plan and manage consistent programs


Motivate through financial incentives

Motivate through commitment

Use incentives to reinforce change but not to drive it

Show recognition for individual ambition using financial or other rewards

Use of Consultants

Consultants analyze problems and shape solutions

Consultants support management in shaping their own solutions

Consultants are experts resources who empower employees

Internal consultants combining the Board directive and representing interest of employees

Both Theory E and O have certain limitations; theory E is not suitable for all industries and theory O should not be applied for start-ups or companies undertaking very fast global expansion. Also the blend of both theories, the integrated model, should be implemented with utmost care, as there is an inherited tension between those two theories hence they should not be applied simultaneously but rather in phases, preferably starting with Theory E and concluding with long-term O approach (Beer, Nohria 2000 p.2).

Looking back at the history of AGCS, elements of both theories have been used in different stages of the company's evolution. When the CEO, Axel Theis took over the responsibility to build the curved-out corporate and specialty business from Allianz Group, he acted as "the sole change agent and the transformation directive came exclusively from the top", says Axel Theis about the beginning of his role as CEO of AGCS. When the company grew into a truly international enterprise, increasing its work force from 100 in 2006 to 3400 employees the attitude to change initiatives has evolved notably. Whilst the current GCP shows many similarities to Theory E by focusing mostly on systems and management information as well as financial results being core strategic goal; the elements of Theory O such as consideration of employee culture, shared vision or participation are given more attention and are seen as one of the key success factors for driving change in AGCS. An already in the Change Cycle (See figure 2.0) suggested dual dialogue between the CEO and employees regarding transformation initiatives is supported by survey results. Namely, 33% employees in the survey still see the CEO as main change agent whereas 30% thinks change should come from the employee collective. Those findings will be included in the change model design in chapter 5.