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Managing a change in an organization is a very huge task that involves changing the organizational culture. The factors that limit organizational change and how to manage it shows that companies growing and expanding into a new competitive space, expanding market scope and attaining a complex combination of knowledge and material assets sometimes fail to change and make the best out of new opportunities because they are still trying to get the best out of the old ones.
Organizational changes reports that to transform an organization needs cooperation, initiative, and willingness of the employees and managers in the organization to make sacrifices. Developing a change vision and strategy, communicating the change vision, empowering employees for broad based action, and establishing that sense of urgency are just some of the factors that can enable a company embrace change. International business case study have also shown that managers rely on steering mechanisms to unexpected circumstances thereby ignoring any information that does not fit into the existing mechanism.
Creating a sense of urgency referred to in international business case study as one way of making the change easier for employees involves risky and bold actions that might include drawing up a balance sheet reflecting losses accurately, or other hard actions such as selling luxurious headquarters which the firm can no longer afford. To establish a sense of urgency means eliminating organizational needs that breed complacency.
Programs aimed to change often get support of only a few people and resources in the organization. The initial stages of change may well do with this, but progressing to attain successful change would need the support of additional resources and people are very important. Normally, a coalition is formed to guide the change in the organization, and is made up of the CEO and his team of senior managers, other managers, and employees.
Coalition should be powerful enough in terms of reputations and relationships, expertise, titles, and information, to successfully guide the change in the organization. If possible, the coalition should try to include union leaders, board members, and even key customers to increase backing for the necessary change to be made.
The guiding coalition should have a clear picture of the future that would provide direction in which the organization needs to move towards, often referred to as the change vision. This vision should be easy to understand as well as communicate; it should be appealing to employees, stockholders, and customers. An unclear vision can disrupt the transformation of the company and can often result to nothing more than confusion. Thorough discussion of the vision by partners in the coalition promotes a clearer understanding of it and even results to a well formulated strategy to achieving the vision of change.
2. A study of change in last five 5 years in an organisation : Barclays
2.1. Overview :
Barclays is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management services with an extensive international presence in Europe, the Americas, Africa and Asia.
With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs approximately 145,000 people. Barclays moves, lends, invests and protects money for more than 49 million customers and clients worldwide.
Barclays is made up of two 'Clusters': Global Retail and Commercial Banking (GRCB), and Investment Banking and Investment Management (IBIM), each of which has a number of Business Units.
The third major area of the business is Group Centre, which comprises all our essential support functions.
Barclays Group Chairman is Marcus Agius, and the Group Chief Executive is John Varley. They are supported by Barclays Executive Committee and the Board of Directors.
Barclays Group headquarters is at 1 Churchill Place in London, UK, but we have operations all over the world, with products and services to meet the needs of customers and clients in local markets.
Barclays strategy is to achieve good growth through time by diversifying its business base and increasing its presence in markets and segments that are growing rapidly.
This is driven by the Group's ambition to become one of a handful of universal banks leading the global financial services industry, helping customers and clients throughout the world achieve their goals.
The strategy is based on the principles of earn, invest and grow.
Supporting this are four strategic priorities:
Build the best bank in the UK
Accelerate the growth of global businesses
Develop retail and commercial banking activities in selected countries outside the UK
Enhance operational excellence.
Barclays five guiding principles are key to the way the business operates:
Winning together - achieving collective and individual success
Best people - developing talented colleagues to reach their full potential, to ensure Barclays retains a leading position in the global financial services industry
Customer and client focus - understanding customers and serving them brilliantly
Pioneering - driving new ideas, adding diverse skills and improving operational excellence
Trusted - acting with the highest integrity to retain the trust of customers, external stakeholders and colleagues.
2.2 Change in Last 5 years:
Barclays completes its acquisition of PT Akita, a privately owned bank with ten outlets in three cities in Indonesia. The move makes Indonesia the 15th country to become part of Barclays Global Retail and Commercial Banking Emerging Markets Business Unit.
Barclays Capital competesÂ the integration of the North American businesses of Lehman Brothers which Barclays acquired in September 2008. 2009 Barclays announces its 2008 Full Year Results, reporting profit before tax of £6.1bn. 2008
Barclays opens for business in Pakistan, with branches in Karachi, Lahore and Islamabad. The launch is the 14th emerging market Barclays Global Retail and Commercial Banking has entered since March 2007.( Barclays.com )
Barclays acquires Lehman Brothers North American investment banking and capital markets businesses. 2008
Barclays acquires leading Russian bank Expobank. The bank becomes part of Barclays Global Retail and Commercial Banking Emerging Markets Business Unit .
Barclays is the first bank in the UK to announce a mass roll-out of contactless-enabled debit cards. From March 2009, most Barclays debit cards that are issued or reissued will have contactless technology built in.
Barclays is the first bank in the UK to give its Local Business customers access to an online service that checks supplier credit ratings.
Absa, majority-owned by Barclays, becomes the first bank in South Africa to reach one million internet banking users.
Barclays increases its position in Asia with investment from two major shareholders in the region - China Development Bank and Singapore-headquartered investment firm Temasek.
Barclays opens three new branches in India, including a 24-hour flagship outlet in Delhi.
Barclaycard Breathe is launched, the first UK credit card which rewards customers for making environmentally aware purchasing decisions.
Barclays is the first bank in France to be awarded the ISO 14001 standard for complying with international environmental management.
Absa, majority owned by Barclays, is the first South African bank to publish a Customer Charter, putting more thanÂ eight million customers at the centre ofÂ its business.
The wealth management division of Barclays is relaunched under the Barclays Wealth brand.
In an industry first, Barclaycard launches OnePulse, a credit and cashless payment card which incorporates cashless Oyster card technology, used on London's public transport system.
A benchmark year in which 50 per cent of Barclays profits are made outside the UK.
Barclays acquires a majority stake in Absa, one of South Africa's leading financial services organsations.
BarclaysÂ moves its world headquartersÂ from Lombard Street in the CityÂ of LondonÂ to the new 1 Churchill Place building in Canary Wharf.
Barclaycard acquires the Juniper Financial Corporation, one of North America's fastest-growing credit card issuers.
3. Concepts and Models :
3.1. Objective :
Mitzberg's Designed School Model help us to designs some strategies to overcome the issues experienced by the organisation. In that regards SWOT analysis is the basic tool to inspect the internal and external environment of an organisation, as it enables management to focus on its core competence. SWOT stands for Strength, Weakness, Opportunities and Threat, in which strength and weakness are internal analysis of the firm's resources and competences and opportunities and threat are the external analysis of markets, competitors and the business environment. ( 12manage.com cited July 2009 )
Strengths of an organisation could be derived from:
Reputation of the organisation and unique brand names
Creative and innovative research and development and products
Location of the business
Quality of the product or service
Multi skilled staff
Weakness of the organisation could be:
Bad reputation or unawareness of the product
Identical product or services (failure to differentiate from competitors)
Unacceptable market sector ( inappropriate location)
Cost ineffectiveness of the organisation
Opportunities of the organisation could be:
New multi national market
Merging with new entries in the same industry
Acquiring inefficient competitors
Entering in to new market segment
Threats of the organisation could be:
Arrival of new rivals
New innovation by competitors
Less access to the distributors channels compare to competitors
Price reduction by competitors
3.2. Acquisition Integration Approaches :
The Acquisition Integration Approaches model of Philippe Haspeslagh and David Jemison provides insight and guidance in Mergers and Acquisitions on choosing the optimal integration approach.
Â In Mergers and Acquisitions, the motto often traditionally was: "Make them like us". Or relatively simple criteria were used to choose an approach. Such as the size and quality of the acquired firm.
Â Haspeslagh and Jemison (1990) have stated that the approach, which a company should take towards integration, should be understood by considering two (additional) criteria:
The need for strategic interdependence.
The need for organizational autonomy.
There are four types of value creation:
Resource sharing. Value is created by combining the companies at the operating level.
Functional skills transfer. Value is created by moving certain people or sharing information, knowledge and know-how.
Transfer of general management skills. Value is created through improved insight, coordination or control.
Combination benefits. Value is created by leveraging cash resources, by borrowing capacity, by increased purchasing power or by greater market power.
. Reasons for resistance to change
According to Kotter and Schlesinger (1979), there are four reasons that certain people are resisting change:
Parochial self-interest. Some people are more concerned with the implication of the change for themselves and how it may affect their own interests, rather than considering the effects for the success of the business.
Misunderstanding. Communication problems; inadequate information.
Low tolerance of change. Certain people are very keen on feeling secure and having stability in their work.
Different assessments of the situation. Some employees may disagree with the reasons for the change and with the advantages and disadvantages of the change process. ( 12manage.com cited on November 2007 )
Approaches to deal with resistance to change
Kotter and Schlesinger have set out the following change approaches to deal with change resistance:
Education and Communication. Where there is a lack of information or inaccurate information and analysis. One of the best ways to overcome resistance to change is: to inform and educate people about the change effort beforehand. Preceding communication and education helps employees see the logic in the change effort. This reduces unfounded and incorrect rumors concerning the effects of change in the organization.
Participation and Involvement. Where the initiators do not have all the necessary information to design the change, and where others have considerable power to resist. When employees are involved in the change effort they are more likely to want change rather than resist it. This approach is likely to decrease resistance of those, who merely acquiesce in the change.
Negotiation and Agreement. Where someone or some group may lose out because of a change, and where that individual or group has considerable power to resist. Managers can combat resistance by offering incentives to employees not to resist change. This can be done by allowing people who are resisting the change to veto certain elements of change that are threatening. Or the people who are resisting the change can be offered incentives to leave the company through early buyouts or through retirements. In order to avoid the experience of the change effort. This approach will be appropriate where those resisting change are in a position of power.
Manipulation and Co-optation. Where other tactics will not work or are too expensive. Kotter and Schlesinger suggest that an effective manipulation technique is: to co-opt with people who are resisting the change. Co-optation involves bringing a person into a change management planning group for the sake of appearances rather than their substantive contribution. This often involves selecting leaders of the people who are resisting the change, to participate in the change effort. These leaders can be given a symbolic role in decision-making, without threatening the change effort. Note this: if these leaders feel that they are being tricked, they are likely to push resistance even further than if they were never included in the change effort leadership.
Explicit and Implicit Coercion. Where speed is essential. And to be used only as last resort. Managers can explicitly or implicitly force employees into accepting change, by making clear that resistance to change can lead to: jobs losses, dismissals, employee transfers, or not promoting employees.
3.4. Change Management :
The Change Management Iceberg of Wilfried Krüger is a strong visualization of what is arguably the essence of change in organizations: dealing with barriers.
The top of the iceberg
According to Krüger many change managers only consider the top of the iceberg: Cost, Quality and Time ("Issue Management").
Below the surface of the iceberg
However, below the surface of the water there are two more dimensions of Change and implementation Management:
Management of Perceptions and Beliefs, and
Power and Politics Management
What kind of barriers arise, and what kind of Implementation Management is consequently needed, depends on:
1. the kind of Change
Â Â Â Â - hard things "only" (information systems, processes)Â just scratches the surface,
Â Â Â Â - soft things also (values, mindsets and capabilities) is much more profound
2. the applied Change strategy
Â Â Â Â - revolutionary, dramatic change as in Business Process Reengineering
People involved in Change (12manage.com cited on 28 th November )
Opponents have both a negative general attitude towards change AND a negative behavior towards this particular personal change. They need to be controlled by Management of Perceptions and Beliefs to change their minds as far as possible.
Promoters on the other hand have both a positive generic attitude towards change AND are positive about this particular change for them personally. They take advantage of the change and will therefore support it.
Hidden Opponents have a negative generic attitude towards change although they seem to be supporting the change on a superficial level ("Opportunists"). Here ManagementÂ of Perceptions and Beliefs supported by information (Issue management ) is needed to change their attitude.
Potential Promoters have a generic positive attitude towards change, however for certain reasons they are not convinced (yet) about this particular change. Power and Politics management seems to be appropriate in this case.
There have been numerous cases of companies delayering their organization structures over the past few years. Many of these companies include industry leaders rarely satisfied with their past success, continually searching to improve all facets of their business, including their management structure. Recent examples of well-known companies that have delayered include Pepsi-Cola, Hewlett-Packard, Corning, Tenneco, and General Electric, to name only a few. These companies recognize that an overly complex structure, evidenced by numerous hierarchical layers deters customer responsiveness, product development cycle time, and decision making speed.
The focus of this paper is the implementation of delayering, rather than on the specific mechanisms companies utilize to determine the appropriate number of layers. (For descriptions on how companies determine the number of layers needed, see, e.g., Tomasko ). We propose that the many benefits that emerge from delayering are likely to be realized only if there are a number of significant accompanying organizational changes as well -- data indicates that simply removing organizational layers will not necessarily help organizations achieve their objectives. Companies that have successfully removed management layers have done so in conjunction with other organizational changes, such as reorienting the focus and accountabilities of key positions, pushing decision making closer to the customer, improving work process flows, and shifting their organization culture toward more candor, collaboration, participation, and quality.
We will summarize the benefits organizations have obtained from delayering, provide examples of why companies have delayered and implemented the new structure, and discuss the results of a survey we recently conducted among companies that have delayered. Finally, we discuss in detail why and how a leading financial services company -- Standard & Poor's Ratings Group -- delayered and note some of the improvements they have realized.
Excessive Layers as Organization Burden
As with other organization design characteristics, there is no absolute number of management levels appropriate across all organizations, although there are a number of benchmarks and signals that can serve as warning of excessive layers. The Conference Board conducted a survey among 105 organizational units of 25 U.S., European, and Canadian companies that provides some normative data on the typical numbers of
management levels in organizations of varying sizes (Janger, 1989).
3.5. Crisis Management :
Obviously, any corporation hopes not to face "situations causing a significant business disruption which stimulates extensive media coverage" (crisis). The public scrutiny that is a result from this media coverage often affects the normal operations of the company and can have a (negative) financial, political, legal and governmental impact. Substantial value destruction is to be feared of, especially when the crisis is not handled well in the perception of the media / public opinion. Crisis management deals with giving the right crisis response (precautionary, structural and ad-hoc).
Some generic help and hints on crisis management
Prepare contingency plans in advance (crisis management team and members can be formed at very short notice, rehearsing of crises of various kinds)
Immediately and clearly announce internally that the only persons to speak about the crisis to the outside world are the crisis team members)
Move quickly (the first hours after the crisis first breaks are extremely important, because the media often build upon the information in the first hours)
Use crisis management consultants (advice by objectivity of PR consultants is important, use the corporate image expertise of specialists)
Give accurate and correct information (remember that trying to manipulate information will seriously backfire if it is discovered, also internally!)
When deciding upon actions, consider not only the short-term losses, but focus also on the long term effects. ( Reinkince 2000 )
4. Organisational Analysis :
Following is the discussed organisational analysis in which it has been analysed that change in using the concepts, models and theories discussed above is meeting the requirement of the growth and betterment of the company.
Large scale operations insulating business risks
Past financial performance building stakeholder credence and confidence to tread further
Revenue and profit diversification ensuring business sustenance
Strong employee engagement and better cost management yielding higher productivity levels
Ability to grow its strong credit card business enhancing cross selling possibilities.
Inability to manage interest rate spreads resulting in declining margins
Stressed capital situation putting pressure on refunding
Failure to execute ABN AMRO deal - hampering emerging markets growth plans.
Retail banking foray in India and the UAE likely to supplement growth
Positive outlook for buy-to-let market may bring business volumes
Buoyant secured personal loans market in the UK could help the business
Buoyant asset management market likely to drive growth further
Subprime exposure to impact growth and profitability
Regulatory fines may compress margins and financial position
Consolidation in the financial services industry to intensify competition further
Increase in online frauds to impose security concerns
Insurance frauds in the UK to impact claims management
4.2. Ratio Analysis
ROA % (Net)
ROE % (Net)
Net Interest Margin %
Calculated Tax Rate %
Loans to Deposits
Total Asset Turnover
Property Plant &Equip Turnover
Cash &Equivalents Turnover
Cash Flow per Share
Book Value per Share
5. Identify the ways in which Barclays are gearing them selves up to cope with the current global crisis?
Under the current climate every organisation is passing through some difficulties due credit crunch. Recession or in other words slow down in gross development product is initiated from USA and then spread over to globe over the past two years. UK is the second worst affected country in the global crisis since it routed significantly from financial sector, particularly banking sector.
2008 was an extraordinarily difficult year for the financial services industry with the second half in particular seeing a period of exceptional instability in the UK. Crisis thrown out from the sub-prime mortgage sector led the UK economy to a worsen circumstances, since after few decades. Hence many of the financial sectors are badly affected such as investment banking, retail banking, stock market etc. which insisted the government to intervene and modify some of the macro economic factors such as interest rate, inflation and economic growth. ( AcKrill 2001 )
During the past few months Bank of England base rate has gone to its minimum of 0.5% in the last few decades. On the on hand this measure has been taken to overcome high mortgage payment by the customers, but in the mean time it worsens the savers circumstances. In order to survive in the crisis Barclays has geared the following:
It was committed to supporting customers through the current economic climate, running over 800 savings seminars for customers
Increase lending to social housing projects over £2billion
Undertook equity capital £13billion and Tier 1 capital and enable its to have over £37billion equity and reserves, which strengthen the liquidity position
Altered its mortgage products to support the change in the base rate
Staff redundancy to cut down the costs
Revise the bonus to skilled workers
6. Future Corporate Strategies
Barclays Global Investors transformed the investment industry by creating the first index strategy in 1971 and the first quantitative active strategy in 1979. After more than three decades and with one of the best long term track records of any active manager Barclays remain a leader in creating investment solutions that consistently deliver on their promise. This success has helped Barclays to become one of the largest asset managers in the world.
Barclays is a Wealthy Private Bank who has got a strong international presence. Barclays is continually expanding in Africa, Asia, Italy, Middle East, Monaco, Portugal, Spain, Switzerland, UK and Europe. Its mean that Barclays is offering a choice where you want to manage your assets, depending on what you are thinking suitable place that suit you best.
Barclays have the international expertise and knowledge that comes from many years almost 300 years of offering bespoke banking and investment solutions to clients from diversified backgrounds. Entrepreneurs, executives, royalty and other successful individuals and families in 140 countries have turned to Barclays to manage their wealth and benefit from their highly personalised financial advice.
Barclays global team of Private Bankers has been drawn from a wide variety of cultat ures, professions and backgrounds. No matter where the clients choose to base their banking, Customers can rest assured that they will receive a high degree of personal service from someone who truly understands customers worldwide wealth management needs. ( Moffat 2009 )