Change Management and Restructuring at First Bank

Introduction: First Bank's Operational Crisis

First Bank is a family enterprise that has, for three decades, been the town's only bank. Mr. First, the founder, originally established it as a small lending shop; over time, this modest business grew into the town's sole financial services organization, providing small loans and over-the-counter cash facilities to clients. The town's growth, however, has led to a tremendous increase in the bank's client base, challenging the organization's current operational structure.

The core problem is a threat to the organization's continued existence: the bank is no longer capable of meeting the town's growing demands. Bank management, comprising chiefly of family members, is unwilling to alter the existing operational structure, improve service quality, or increase the number of personnel employed. This has been a major factor in the bank's inefficient, stagnated, and outdated structure. Beyond hiring fresh talent, expansion through a broader product range and automation of existing services is necessary. Change management is required for an organization to move from its current state to a desired future state. Consequently, at First Junior's (Mr. First's son) insistence, management has appointed Transform Consultants to aid them in effecting organizational development and change.

Change, in general terms, is described merely as "a new state of things" that differs from the state of things previously (French & Bell, 1999). By employing this definition, organizational change can be explained as a transition from an existing state to a future state that the enterprise wishes to reach (Cummings et al., 1985). The simplest way to understand change in the organizational context is through comparison with other forms of change, rather than through a strict definition. The term "organizational change" deals with a transformation in the activities of an organization; however, this definition does not fully suffice, as it fails to specify the kinds of activities undergoing change. A comparison of organizational and operational change reveals that the former has a broader scope — covering all operational practices, manufacturing, logistics, and customer service — while the latter deals exclusively with individuals in the organization, their values, and their roles (Salminen, 2000).

According to Schoonover and Dalziel (1988), change is either an unplanned or planned organizational response to external and internal pressures emerging from various sources. For instance, external factors can include competing firms, technological advancements, and regulatory bodies, while internal change forces may include product or service obsolescence, increased workforce diversity, new market opportunities, and new strategic aims (Lanning, 2001). Numerous strategic factors drive change processes (Schilling & Steensma, 2001); these include the requirement for greater organizational-task-related integration (Rugman & Hodgetts, 2001) and the necessity to bring about better enterprise performance (Balogun & Hope, 2008). Adler and Shenbar (1990) assert that all changes necessitate revision and transformation in organizational processes, methods, human skills, culture, and strategy.

Change Management Theory

The term "change management" is customarily used to describe the management of organizational change — change in company structure, leadership, culture, job structure, values, and roles (Salminen, 2000). Change can broadly be categorized as radical or incremental. The former (also called revolutionary change, turnaround, or transformation) denotes an extensive, major alteration in organizational strategy and culture, while the latter relates to evolutionary modifications, problem-solving, and fine-tuning. In short, incremental change involves improvements to company performance without fundamentally altering the company (Lanning, 2001).

To comprehend the specific reasons why change is needed and to understand what changes must be effected in a cost- and time-efficient way, a SWOT analysis of First Bank was carried out. SWOT analysis refers to an assessment of a firm's internal weaknesses and strengths, and external threats and opportunities. Strengths represent current organizational elements contributing to exceptional performance (such as a highly qualified workforce, a focus on quality enhancement, and employees' thorough understanding of company objectives). Weaknesses denote company factors that contribute to lower service quality or increased operational costs. Opportunities represent noteworthy novel business initiatives open to a company, whereas threats are elements capable of adversely affecting organizational performance (Gretzky, 2010).

Strengths: sound client base; bank credibility with clients; good client-company interpersonal bonds; a small hierarchical arrangement that facilitates speedy decision-making; favorable loan repayment terms; and flexibility in interest rates.

Weaknesses: untrained workforce; family-dominated management; limited range of financial services offered; inadequate company premises; obsolete technology (including the absence of even one ATM); a poor and depleting capital base due to lack of service diversity; and an absence of clear operational procedures, leading to resource wastage and reactive decision-making.

Opportunities: the presence of innovative, lucrative products in the market; the town's growing demand for service diversification; and the availability of competent individuals in the labor market.

Threats: the potential entry of larger, more dynamic banking firms; un-serviced loans resulting from the absence of established operational methods and over-reliance on client familiarity; and treasury regulation triggered when the client base exceeds 2,000, which will influence lending and repayment rates.

First Junior has graduated from college with a business degree. Higher education away from his hometown has exposed him to other markets across the nation, giving him the knowledge required to help save the family bank from collapse, as well as experience with banking organizations in other regions. He is therefore aware of the range of services and products the banking sector can provide. Despite First Junior's competence to guide the family enterprise through its change process, his father, Mr. First, refuses to assimilate change, delegate authority, or allow change to occur. This has generated significant conflict, as both parties take an assertive stance — pursuing their personal interests — rather than adopting a cooperative stance in which both are willing to accommodate the other's interests (Thomas, 1976).

SWOT Analysis of First Bank

The solution to managing this father-son conflict is encouraging them to collaborate — a cooperative and assertive strategy in which both parties endeavor to work together to develop a mutually satisfying, integrative solution. This approach is grounded in a pursuit of mutually beneficial outcomes; it may entail information and idea sharing through collective problem solving and the honest confrontation of differences. A second key strategy is accommodation — a cooperative, unassertive approach wherein one of the conflicting parties sets aside its own interests to accommodate those of the other. In other words, it may require yielding on certain positions. A third conflict-resolution strategy is compromise, wherein at least some interests of both parties are satisfied while others are conceded. It entails seeking trade-offs to reach satisfactory outcomes for each party (Thomas, 1977).

For effective conflict management, both parties need to understand and accept that the organization's interests hold more value than their personal interests; they should be prepared to give lower priority to personal concerns and to shift focus from self to the enterprise. Some individual preferences must be set aside for the company's benefit. This helps prevent both parties from attaching personal identity to solutions, allowing both to focus on organizational interests.

This will prove a significant challenge for Mr. First, who feels as though his authority as enterprise owner is being undermined. He must first realize that delegating authority to others does nothing to diminish his own control. Additionally, his son has been empowered by education, and the knowledge and experience gained must be deployed for the betterment of the enterprise. First Junior should be free to apply his experience without being dismissed. This will also be a challenge for First Junior, who regards his education as the key to the business's continued survival. The son may harbor ego issues and may be anticipating his father's exit from leadership so that he can take control. He must, however, acknowledge the fact that his father built and ran the business successfully for 30 years. Mr. First's efforts need to be valued, not discredited. First Junior must aim to build upon the foundation his father established, rather than dismantling it in the name of change. Once First Junior demonstrates to his father that he will add value and work diligently, Mr. First will gradually reduce his resistance to change.

There are 20 employees at First Bank, and the recommendation is that they come together as a task force to promote inclusivity and collaboration. Each organizational member has played a part in ensuring the bank's survival and growth over many years; being actively involved in the change process will cultivate a sense of ownership, thereby reducing resistance. Formal group functions have been enumerated by Schein (1980) as follows: carrying out complex tasks that cannot easily be performed individually; inspiring creativity and eliciting novel ideas; implementing decisions by establishing collective goals rather than individual ones; accessing multiple perspectives for problem solving; conveying and reinforcing common group messages; establishing and testing beliefs, experiences, meanings, and shared reality; reducing feelings of unease, helplessness, and uncertainty; and achieving jointly set informal goals and targets.

For achieving fixed group objectives, the foremost step is role establishment. A role refers to the collection of duties and expectations for behaving in a particular way in specific contexts. Group structure is enhanced by roles, owing to the anticipation that persons assigned to roles bring what they perceive their corresponding roles to entail, alongside the expectations of other group members (Rollinson, 2005). Individual roles in teams are negotiated sets of behaviors that evolve over time as team members forge working agreements about their relationships and responsibilities.

Conclusion

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