IMPORTANCE OF MANAGING THE HUMAN SIDE OF CHANGE:
A Case Study of Inautix Technologies
On 2nd July, 2007, the CEO of Bank of New York Mellon Robert P. Kelly quoted in financial times, “Today we are establishing a global financial services growth company with exceptional service and performance being the hall marks of the new company” (BNYM, 2007). The statement was made after the merger of Bank of New York Company and Mellon financial corporation in to a newly formed Bank of New York Mellon corporation. This change focussed on helping clients move and manage their financial assets operating in 34 countries and serving more than 100 markets. Bank of New York and Mellon had separate IT division, where the IT sector of Bank of New York Mellon is known as Inautix technologies. By working as an ‘Application developer' for Inautix technologies, I sensed the complexity in managing the human side of change, due to the change in the process and structure of the organization brought out due to merger. The primary focus here will be on effects of the change from perspective of Inautix and rest of the essay is structured as follows.
The first section focuses on the imperative element of change due to merger, which is the close down of potentially insignificant developed and developing software projects thereby changing the existing team structure and locations, affecting the strong organizational culture in turn. The second section focuses on the issues that arose due to the change process by Bank of New York Mellon which had adverse effects on Inautix. The third section deals with the analysis and discussion of the identified issues incorporating theory and practice from the managerial perspective. The final section draws out the conclusion summarising the analysis and discussions made thereby emphasising the importance of managing the human side of change.
Bank of New York Mellon which had clear structure and goals decided to close down projects which performed similar functions, in order to reduce redundancy as a part of their post merger strategy. This move was considered to be as smart strategic move by the analysts all around the world but did not impress many of the employees of Inautix as such. Software projects which were potentially considered to be inefficient were categorised and dumped with parallel emergence of new projects. The higher level organizational structure of Inautix remained unchanged except for the changes occurred in the lower team level. The merger involved segregation of the existing teams to work in more complex projects and some projects demanded employees to work in other areas of expertise. Therefore more than categorising as structural change and changes due to staffing, these changes could be partly extended as cultural change, where managing the human side of the change gained much importance enveloped with complexity.
The culture prevailed in Inautix is a ‘Tough guy, macho culture' as identified by Deal and Kennedy where the culture tend to be young, risk taking and intimate relationship within employees with high rewards. However the authors view point of element of ‘sacking' in this type of culture did not hold well in this situation, as no employee has been ever ‘sacked' in the history of Inautix. Following to the merger decision from BNYM, Inautix was pushed to make changes by ignoring the culture, trying to change the culture to fit strategy and change the strategy to fit in the culture. The organisation involvement in changing the culture was extremely challenging due to the strong existing culture (Senior & Fleming, 2006). In brief, senior level managers at that point of time were indeed managed by the change than managing the change.
This second section briefly describes about the issues that arose due to the change. One major issue identified was the lack of commitment to change from the top management involving employees, as proposed in the change management model. The ‘Change process' in the model emphasizes on creating a willingness to change and making people aware of the change process for deploying a successful change. Top management of Inautix in this regard took least effort to express their commitment towards change and involve employees through the change process (Burnes, 2000).Focus on people during the change process is identified to be an important criterion in the change process and it is indeed surprising that the organization failed to do such initiative (Pfeifer et al, 2005). The approach that the organization considered to involve employees in the change process was to provide them with a wine bottle and fox biscuits at the day of merger, leaving many employees looking for career growth unimpressed.
The noticeable insight from the above discussion includes the lack of proper communication during the change process, as all the managers realise their importance but often fail to do it. The usual mode of communication in Inautix was through emails and town hall meetings for every quarter indicating the performance and position of the company. As the top level managers took no initiative to educate employees and communicate vision of the change, fear of loss of jobs and recognition remained among employees due to merger, provoking some of the key employees to head the door thereby joining hands with the rivals. This indeed was a major blow to the organization as a whole primarily due to the inconsistency of the managers to crop up vision statements engaging the employees (Kotter, 1995). In brief, communication remained physical rather than psychological.
Apart from the fear of loss of jobs, the resistance to change included the insecurity due to the market conditions and existing team culture at Inautix. The closing down of several projects at Inautix put down around 25% of the employees in ‘bench', where the employees are not formally allocated to projects, instead they wait for any other new projects to keep them engaged. But due to anomalous market conditions, employees did not appreciate such situations considering the risk and pressurised management to keep them billed all time, which caused a concern for the management. Also the team culture in Inautix is dynamic and effective in a way that the employees working within the teams are bonded with each other and had a sense of understanding aligned towards the organizational goals. The sudden decision of change in team structure and staffing let employees down morally, even though they were reluctant to express their feelings to the management.
On the other hand Inautix offered increase in bonus and salaries to motivate and retain employees during the change. It was indeed a good move where they were successful only in keeping up and motivating some part of the employees seeking materialistic rewards by taking up the challenge in a more deterministic way, leaving the other part unconcerned. Harriet Brathwaite, communication officer of the public sector reform office mentioned in his article that during a particular change, a set of people will be aganist it but some view it positively. It is highly important to know how every people in the organization react to it (Brathwaite).
Force field analysis argues that for a change to happen the forces supporting the change needs to be strengthened and the opposing forces needs to be weakened. From the overall issues discussed, it is evident that Inautix were only partly successful in weakening the opposing forces by motivating employees through financial rewards. But seldom all employees remained unsatisfied for the amount of risk they hold being in ‘bench' fearing market conditions and loss of job. By considering all these, the one significant element that strikes is the inability of the organization to lead change than trying to manage it (Senior & Fleming, 2006).
In the third section, let us discuss on how effectively Inautix could have led the change by considering some of the relevant theories and models associated with it. As the change brought out involved culture, the organization indeed required planning and transformational leadership behaviours. In this prescribed situation, leaders need to cultivate people more than command and control behaviours. The final process of the ‘change management model' which is the ‘change process' rightly depicts the need to involve people and create a willingness to change. The senior management restricted its ability to create such initiative and considered middle managers and employees as obstacles of change rather than involving them. However in a large organization, involving every stake holders in the change process might not be feasible. Therefore identification of employees as key stakeholders in the organization through ‘Stake holder mapping matrix' would have been effective. However there is another area to look into where involving key people might get tricky, as sometimes people with ‘wrong attitude' might turn things the other way (Burnes, 2000).
Communicating vision is an important element of leading change, which the organization failed to deliver with perfection. Hayes (2002) suggests four features of communication networks; Directionality, role, content and channel, out of which I consider the role and channel, are the vital elements in this scenario. Middle level managers should have communicated the vision effectively and inspires employees to actively participate in the change process. Inter personal relationship between the managers and employees are highly vital in this regard to make them feel, realise the importance of change and persuade the employees psychologically. Interestingly as an evidence of this, I have hardly seen my manager communicating with his subordinates on any regard and communication during this phase was no different. In fact some of the employees knew about the team change and staffing reorganization only on the day it happened, with hardly any time to adjust to the situation.
At Inautix, channel of communication remained static through emails and town hall meetings. This probably was not the perfect medium of communication for this type of change process. As the organization involves busy culture, often employees ignore communication through emails. The change process on the other hand involved emotional feelings of the employees and town hall meetings addressing the mass crowd seemed ineffective. Instead the channel of communication should be face to face, drilled down in accordance with the organizational structure. This precisely would have brought sense of belongingness to the employees ensuring trust and satisfaction. Therefore more than ‘Communicating the vision' as described by Kotter (1995) in the eight step process of creating effective change, I consider the process step should be rephrased as ‘Communicating the vision in the right way though right person'.
As all the authors emphasize, the change process does not occur in vacuum. Like in this case the primary reason for resistance of change is due to the ‘Parochial self interest' of the employees. In other words, employees were concerned about their career prospects and discontinuous skill development due to the loss of projects. Above all, employees were reluctant as the change would divorce the existing culture where strong bonding with peers existed as a part of informal organization. As an employee I was much reluctant to the change due to the above factor which brought in a sense of loneliness and insecurity (Kotter & Schlesinger, 1979).
Kotter & Schlesinger (1979) proposed effective methods to deal with the resistance of change. However all the methods do not hold good for every situation, like in this case which we will discuss shortly. One of the method of ‘Education and persuasion' is considered to be an significant approach in this case where educating employees on the change and more importantly the benefits of the change are to be stressed which would have been an effective persuasive strategy as well. On the other hand Nadler‘s (1993) argument of motivating people by creating a feeling of dissatisfaction of the current state should be refuted for the fact that it enriches the employees distrust towards the organization.
Other methods such as involvement of employees during the change process and facilitation to provide time and opportunity are appropriate in this case. However as discussed earlier involving key employees during the change process is critical, but indentifying the key employees is a mind - numbing challenge for the organization. Inautix should have considered providing the opportunity for the employees in ‘bench' to work in some of the internal projects and recognise their efforts to reduce the resistance for change to some extent thereby empowering the employees to act. The approach of ‘Cooption' as identified by Kotter involving managers might not really work out in the organization, where some managers belonged to the ‘laissez faire' category, which may even have the chances of turning the other way (Kotter & Schlesinger, 1979).
In the NEAS ELT (2007) management conference it is discussed that successful change originate when the change is managed involving the people in a systematic manner. Ray Davis, the president and CEO of Umpqua Holdings Corporation who brought out tremendous growth for his organization suggests to remain close and personal to employees as the change cannot be led by remote control as the culture comes from oneself. This way of doing things must have been more appropriate for Inautix, as studies indicate that changing culture as an initial process of change initiative would result in failure or remains superficial (Davis, 2007).
In brief, this essay elucidates the change occurred in Inautix technologies due to merger by initially drawing up elements of change by linking the nature of complexities and issues due to the change. Critical analysis of the change by relating theories with practice were done from the perspective of a potential manager. Summarising from the above analysis proves that the managers basically need to have strong skills in communicating, making decisions and deal with resistance to handle the change involving human side. However above all, a successful manager needs to go beyond these to achieve, that is to lead change to tackle the soft part of the organizational process (Tiwary, 2008). Kotter's (1979) eight steps in leading change comes extremely handy at this situation provided the cultural changes happen only after the employees see the association between new initiatives and performance improvement. Therefore in his highly volatile corporate world for any successful change process to happen, organizations must cultivate leaders than creating managers with ability to achieve organizational purpose and manage the human side of change (Kolb, 1995).
BNYM (2007) Press releases. Available from: http://www.mellon.com/pressreleases/2007/pr061407b.html [Accessed March 4, 2009].
Brathwaite H, Managing change. [Online]. Available from: http://reform.gov.bb/page/newspdf/archive/MANAGING%20CHANGE.pdf [Accessed March 1, 2009].
Davis, R (2007) Leadership starts with you, Leader to leader, Spring2007, Vol 2007 Issue 44, pp33-37.
Hayes, J. (2002) The theory and practice of change management. Palgrave Macmillan, New York.
Kolb, D.A., Osland, J.S & Rubin, I.M. (1995) The organizational behaviour reader. 6th edition, Prentice hall. New Jersey.
Kotter, J.P. and Schlesinger, L.A. (1979) Choosing strategies for change. Harvard business review.
Nadler, D. (1993) Concepts for the management of organizational change, in Hayes, J. (2002) The theory and practice of change management. Palgrave Macmillan, New York.
NEAS ELT Management conference. (2007) Leading styles, leading change. Available from http://www.neasaustralia.com/pg/pdf/conf07leadsty_js.pdf [Accessed 24th Feb, 2009].
Pfeifer, T., Schmitt, R & Voigt, T. (2005) Managing change: Quality- oriented design of strategic change processes. The TQM magazine, Vol. 17, Issue.4, Emerald group publishing limited.
Robbins, S.P. (2005) Organisational Behaviour. 11th edition, Pearson Education, New Jersey.
Tiwary, R.S. (Ed) (2008) Managerial leadership. EBSCO research starters, EBSCO publishing Inc.