Change Management in Australia and New Zealand Banking Group

Introduction

            In the course of the past two decades, Australia and New Zealand Banking Group (ANZ) has implemented value-based change to become an organization that prioritizes and caters for the needs of its diverse clientele. This has been achieved via the creation of relationships of trust with its workforce, customers, and the community. Initially, the organization had been recording poor financial performance until a new Chief Executive Officer, John McFarlane, along with the managerial team spearheaded it to financial success in the late 1990s. Even so, this was just the beginning of a lengthy journey of change as the improvement did not signify eventual success. ANZ was obligated to create fresh attachments with its stakeholders following the widespread branch closures, hiked bank fees, and other industry-based issues that had originally deteriorated the public’s contentment with financial institutions in Australia. Specifically, the bank recognized the importance of focusing beyond financial performance and growth of the institution itself. If it was going to win the trust of its customers and gain a large market share in Australian Markets, ANZ was duty-bound to transform into a values-driven organization. The organization finally adopted a new approach in 2000 that not only focused on performance and growth but also on a new values-based culture and the ability to manage all these things concurrently.

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Main Features of the Organizational Transformation during McFarlane’s Tenure

            The structural change at ANZ gave a clear picture of organizational roles that employees and managers were expected to play in the transformation process as well as a willingness of the bank to meet the needs of customers in the market. The bank sought to stand for the values of integrity, collaboration, accountability, respect, and excellence in its operations. To initiate the change, McFarlane directed an assessment of ANZ’s culture and status. Intrinsically, the transformation process was characterized by a systematic approach to the “human side” of change, long-term commitment, involvement of leaders at every layer, encouragement of ownership by key change agents, recognition of the importance of corporate culture, and support for those affected by change, among others.

            First, along with the CEO, ANZ’s managerial team adopted a systematic approach to the “human side” of change to propel the organization. They recognized that ANZ would derive its success by placing a firmer focus on its human resource, its clients, and the community at large, and as a result, activated a strategy for excellent operation labelled “Perform, Grow, and Breakout.” Each aspect of this strategy had a specific focus as far as the stake holders were concerned. Notably, any organizational transformation is bound to bring forth human relations issues and the ANZ was no exception (Cummings and Worley, 2014). The organization implored employees to take new responsibilities and play new roles, which meant that they were required to develop new skills and capabilities in order to align with the change process. McFarlane piloted this challenging process by implementing a flexible approach of management that systematically dealt with all the potential issues that would put the organization at risk. This was developed in the early stages of the transformation process.

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            Second, employees depended upon the long-term commitment of senior management for support and motivation. Since organizational transformation is disconcerting for employees at all levels of an organization, all human resources were reliant on senior management for direction, support, and strength during the change process (Argyris, 1993, p.96). Therefore, McFarlane and his senior teams implemented strategies to secure the commitment of ANZ’s people prior to the change and in which team leaders were expected to model the desired behaviors and challenge the rest of the organization. The bank created a devoted Breakout and cultural transformation team to provide personal and emotional support to employees in order to help them cope and endure the change positively.

            Third, McFarlane’s tenure ensured the involvement of leaders at every layer of ANZ as an institution as well as at every stage of the change process. Markedly, all change programs tend to affect various levels of the organization as they progress from initial strategies or design phases to phases of implementation. Thus, successful change strategies, such as that adopted by ANZ, typical embroil selection of leaders throughout every department of an organization and inducing implementation in such a manner that allows change to cascade through the entire organization (Gibbons, 2015). McFarlane particularly ensured that ANZ built an organization-wide engagement and support to ensure the execution of organizational change across both top and bottom levels of the organization.

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            Fourth, ANZ change process was characterized by assessment of success at each stage of the change process. McFarlane recognized that his organization was obligated to measure achievement in the breakout process in order to achieve any meaningful transformation. Change tracking represents one of the very crucial activities in the management of change. ANZ primarily concentrated on performance management as an integral part of its change tracking system. Performance was based on a balanced scorecard approach with four major result areas consisting of finances, customers, employees, and the community. The performance assessment phase consisted of appraisal of employee accomplishment at the end of every annual period.

            Fifth, ANZ exposed its workforce to regular, clear, and timely communication through the transformation process while acknowledging the value of corporate culture in organizational success. Often successful organizational transformation programs are reinforced by core messages via regular, clear, and timely communication even before the commencement of the change. At the beginning, ANZ focused its communication efforts on the articulation of a convincing urgency for change and the prevision of a road map for guiding behavior and decision-making. Thereafter, it proceeded to develop the communications material and forums in a manner that allowed the organization to push out information and solicit employee feedback and input.

            Lastly, just like other successful transformation programs, ANZ’s own program prepared for the unexpected and encouraged ownership by key players. Soon after his appointment, McFarlane lowered the bank’s risk profile by means of abandoning investments in new markets and restructuring the head office operations, as well as outsourcing and streamlining staff headquarters. These efforts were part of the preparation for change. As a large change program, ANZ transformation also encouraged ownership by leaders willing to admit responsibility for the implementation of change. The case study highlights that McFarlane owned shares in ANZ, indicating the change would affect his success as well. In addition, his ownership was reinforced by a reward of a $4 million handshake on his retirement.

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Challenges for Managers in Implementing Transformation Strategies

            The implementation of transformation strategies that demand the alteration of organizational culture such as the one by Australia and New Zealand Banking Group presents challenges besides requiring time. When McFarlane requested various departments to assist with communicating the new values and vision of the organization, there was a likelihood of some to unwillingly comply without noticeably showing their repulsion for change. This is just an example of some of the challenges that may cripple the implementation of transformation strategies. The most common challenges include lack of consensus, communication failures, employee resistance, and missteps in the planning process.

            A lack of consensus is experienced when some members of the organization fail to agree with the new change. Normally, the decision to implement a transformation strategy originates from the top levels of the organization, and although the management may not have everyone onboard at the beginning, all members should be on the project at a later stage in order for the change process to be successful (Dallas, 2015). To begin with, all management level staff should be committed to implementing the change before the plans are communicated to the rest of the organization such commitment should be built on a solid foundation through the planning process.

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            Communication failures occur when the management fails to communicate some aspects of the transformation strategy or the entirety of the change, particularly when the organization is planning to undergo a major change like a merger or downsizing. Failure in communication can be catastrophic to change process as they are likely to invite rumors and cause panic in the workplace (Murray, Markides, and Galavan, 2008). This is further bound to disrupt work as a result of workforce’s exclusion from the change process. Thus, organizations should keep their employees updated about the progress toward change, particularly in the case of major changes. Indeed, employees should be involved as much as possible in the transformation through brainstorming sessions and meetings.

            The introduction of transformation strategies is also expected to provoke some form of resistance from employees as a result of their correspondence with the traditional culture of the organization. Even on the communication of the intended change, the workforce is normally conformed to their longstanding roles and hence they may get upset when a major change disrupts their familiarity (Jabri, 2012). Such employees may be unwilling to relearn their roles or change the order of things. Therefore, it is essential for organizations to put in place mechanisms for preventing employee resistance.

            To sum up, the lack of proper planning is itself a challenge to the implementation of a transformation strategy. A haphazardly planed changed process is certainly likely to cause more problems than benefits. For instance, if the organization is transitioning to a fresh management system, the management should assess the compatibility of the new system with the old system, how the old system will evolve into the old system, as well as the degree of access in the duration of the change. The organization will also be obligated to assign fresh roles to individuals in the course of the transition. Other important factors to consider in planning are the timeline and the effect of the change.

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Attributes of key leaders and the Role of Leadership in the Change Process at Australia and New Zealand Banking Group

            Perhaps the most noticeable role of leadership in the management of change at ANZ was that of MacFarlane. Throughout his tenure as the CEO, he spearheaded the bank’s transformation program by implementing a value-based approach which resulted in improved financial performance, competitive advantage, as well as customer and employee satisfaction. Some of the main attributes he portrayed in the change management process included action orientation, risk tolerance, commitment, collaboration, and support.

            On his appointment at Australia and New Zealand Banking Group, McFarlane seems to have known that the adaptation and implementation of change requires action orientation for an organization to achieve success. He revealed his high energy levels and willingness to take action as soon as he began working in the bank. As opposed to low people with low levels of energy, highly-motivated leaders like McFarlane are inclined to participate in the action (Goleman, 2000). Indeed, he engaged in the transformation process through various means including the reduction of risk and restricting, as well as acceptance of the risk that accompanied the change.

            McFarlane was also a highly committed leader. He promised change as soon as he arrived in the organization and through his efforts, it was achieved. Together with the managerial team, he initiated, strategized, and executed the change. Notably, effective leaders initiate the change process by assessing the business context, comprehending the need for change, developing clear goals, and identifying a common goal (Davila et al., 2013; Rodriguez-Garcia and White, 2005). This is exactly what McFarlane did immediately after his employment. Specifically, he began by commission McKinsey & Co to conduct a systematic study of the bank’s culture in order to assess and understand the company’s position. By knowing the organizational priorities, he was able to collaborate with all members of the organization to achieve the desired change.

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            Lastly, MacFarlane led the change process by offering support and swaying key stakeholders. Since Australia and New Zealand Banking Group had a history of bad debt, poor organization, customer dissatisfaction, and employee morals, among other issues, it was easy for him to convince the main members of the organizations that change was necessary. Therefore, he proceeded by delivering financial performance and value to stakeholders, making Australia and New Zealand Banking Group a distinctive in the face of its clientele, and developing foundations for long-term success. Above all, he directed the structuring of a vibrant, high-performance, and energetic culture where all employees are inspired and passionate in their roles.

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