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Abstract

Sri Lankan economy is growing in recent years with the end of the humanitarian war after 30 years, and countries infrastructure also keeping a high rate in development, and Banking industry is playing a major role in backing the developments. As countries states coming in to a better in social and economic growth, all the industries are blooming to face the challenges with globalization, as such Banking industry also have drastically changed in the region, and now it has become Banking industry, with Financing, Leasing Facilities, Quality services and increasing transaction hours of Banking industry (Sampath bank Super Branch). As change is an inevitable aspect of life, and implementing change as a transformation of an industry itself becomes a challenge for management and also for the change employees, they have implemented a transformation project in their operations industry had experienced some failures and resistance to change in transformation projects

This research was conducted to find out factors affecting the resistance to change, and also to provide appropriate recommendation pertaining to findings, The six factors affecting resistance were identified and selected form the literature and the interviews with the employees in the industry.

The Research was carried out in Pan Asia Bank using convenience sampling method, since it was very difficult to do the research with the entire industry. Data was collected through questionnaires from 106 employees. The researcher held a few preliminary interviews, with staff members in three different levels of hierarchy, to gain a deep understanding on the present situation in the company. The respondents included one senior manager from HR, one middle level manager from Operations (Branch manager), and 5 operational staff members.

The researcher found several variables which was having an effect on to change. Those variables were monetary incentives, communication practices, management involvement, provision of training, work life balance, interest over work. Researcher would do a deep study on above variables to have the understanding of the problem of research.

Outcome of the Analysis explains that by adherence to the industry specified management practices to reduce the resistance towards change. Analysis discloses that, all six factors identified were negatively impacted through the change management.

Outcome of the Analysis is discussed in detailed in the report together with the recommendations. Thus the results will be helpful to find solutions to overcome the prevailing situation in Sri Lankan Banking Industry.

Title

Factors influencing the resistance to change: a case in Banking Industry.

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Background study

Change management represents a large and rapidly growing discipline that is being increasingly deployed on a global scale by all types of organizations. It refers to a structured approach that facilitates the adoption of change by groups and individuals within an organization. The process of how organizations change draws on many disciplines from psychology and behavioral sciences to engineering and systems thinking. The underlying principle is that change does not happen in isolation. It impacts the whole organization and each individual associated with it.

In the current climate of economic pressure and evolving political priorities, organizational change within public bodies is becoming an increasing priority. However, change is a complex process that can have negative as well as positive outcomes and as such it is worth looking at the available evidence so that the process is conducted as efficiently and effectively as possible.

In global context people, specially middle and top management are always concerned about the superior quality of service. Many Banks have achieved this service quality with change. Change may vary in different contexts, such as manual to automation, towards green concept, networking through Information and Communication Technology (ATM), and many more.

Organizations do change, not only for the betterment of organizations but also for the betterment of the employees too. New knowledge, technology, political, cultural, and economical forces are the reasons for the change in organizations. Organizations cannot stand static with the current competitive world of business, since globe has become a single village with the help of information and communication technology. There were many giant organizations which were not believing in change which have gone bankrupted, because they have not identified the needed change in a right place, and sometimes they may be in a thought of “being a giant in the business” won’t need changes, but unfortunately many large organizations in the global context winded up from the business.

Some small organizations which identified the needed change in the right time have become giants in different field, not only became giants, they reached one of the top ten blue chip companies in Sri Lanka, and also in the world. There are many success stories about organizations which changed them at the right time in the right way with the right people, and were able to overtake the market leaders.

The last ten years have been a time of remarkable change in the Banking industry. The marketplace has been transformed by the interweaving of new technology, new procedures , new customer needs, and improvement of Tele Banking and Internet Banking. Countries have seen Internet Banking deregulation as a requirement for continued and renewed economic success, while at the same time the Internet has moved from a research tool to an incredibly rapidly growing force, with a seemingly endless ability to drive innovation, change consumer patterns, and drive business value.

Research problem

Change is an inevitable aspect of life, and implementing change as a transformation of an organization itself becomes a challenge for management and also for the change employees. This research aims to identify the factors influencing resistance to change. The research focuses on the success of a change management process in a company in the Banking industry.

Pan Asia is a new in the Banking industry in Sri Lanka and But it has offered almost …….. years of trusted service. The company it still dominates the industry with a follower in market share. The company deploys about …….employees and records an annual turnover of around ………. billion rupees. It offers its employees with superior salaries in addition to offering annual bonus of ….. months salaries, cost of living allowance of Rs …….a month, overtime, other allowances and many other staff welfare programs. Retirement gratuity is computed well above the labor regulation minimum level and the entitlement increases with the increment of the service period. When Pan Asia’s employee completes 25 years of service, the gratuity entitlement is paid at 500% of the general level paid by an average other employer. In addition to this general package, the senior management, managers are provided with lucrative allowances such as car allowance, fuel allowance, overseas training in their areas and driver allowance and many more allowances.

Pan Asia maintains formal policies and procedures to recognize achievers by the process called “Quick Win”, which is when an employee comes up with some innovative ideas which helps company to reduce cost, improve deposits, improve the service quality, is encouraged by offering attractive incentives, rewards, recognition and appreciations. As an annual event, the company honors the highest performed employees at Annual awarding ceremony with monetary rewards, trophies, appreciation letters, and not only that but also their details with all the achievement details published in internal magazine.

There is a process in place where ever change occurs, that should be informed and monitored by special team and assess the change with evidence whether it fulfilled the relevant target with the change, and finally if it succeeds, it will be communicated with a circularly mail to all employees, this process named as “change for betterment”.

Company provides good working conditions for employees, which no doubt leads to a higher level of job satisfaction. In addition to providing good work environment, the company provides subsidized meals. There is an in-house medical room with a Full time nursing staff & medicine to ensure the health conditions of the employees at company’s expense. And also employees are given a medical cover where they have to admit to the hospitals for medication, those bills also being paid by company up to sixty five thousand in rupees.

Company considers the training as a vital tool in equipping employees with latest technological and management knowledge especially in a highly competitive market environment. Towards achievement of this objective, the company spent heavily on training and a considerable number of employees are trained both locally and overseas on a regular manner. Being a cooperate sponsor for most of the corporate seminars, the company gets number of opportunities free of charge, which are utilized in full by sending needy employees. There are two inside training centers which are used most of the times for in-house training requirements.

In 2012/ 2013 financial year company implemented a mass change called Pan Asia transformation project, where each and every department happened to change their processes, their office appearance, and the way they think about the company with the effect of appointing a new GCEO. This project was undertaken to ensure a soothe operation, eliminating certain problems that were present. However, after spending billions in Rupees for the change, still some areas of the company have the same problems what they had before the transformation project implementation.

The researcher held a few preliminary interviews, with staff members in three different levels of hierarchy, to gain a deep understanding on the present situation in the company. The respondents included one senior manager from HR, one Branch Manager, and 5 operational staff members. The findings from the interviews revealed the following:

Senior manager from HR holds a very optimistic view of the changes, says, and sees the change has happened in a right time at right place to achieve the company’s targets. He assumes that employees are happy with the change. He assumes standardized processes were taken place, and has a strong belief that, change made the organization reach a stronger position.

Branch Manager also holds a positive viewpoint of the implementation of standardized software systems. He is happy about new system and the staff training that employee’s had to undergo locally and overseas. However, he had some negative viewpoints about the attitudinal and behavioral change expected from the employees.

Operational staff (five members) amazingly have spoken negatively with same topics with regards to the transformation project such as working condition, monetary incentives (like overtime, believe that the change has benefitted the upper levels of the management and not the middle and low levels.

At present, Pan Asia’s transformation project is completed, but the question is, whether they actually received the change expected through the project. Physical and technological changes appear in place, but the physiological changes do not seem to have reached the level expected.

As examples, Pan Asia has setup Integrated NOC (INOC).all the technical aspects linked together and they all being considered as one team. INOC would have to give business and technical solutions whenever needed. But after this setup also there were some clashes between work groups. They all in a thought of they own the access to some services and also some servers, when other integrated unit needs a help, they are reluctant to help, but they never say it. They show the resistance while working with collogues.

As the researcher found, the change has resulted the operational level employees who possess qualifications in IT. This has resulted in losing commitment and interest in career among the operational level employees who are qualified in IT. However, the senior management assumes that there is a path where technical people also can reach senior positions in the career ladder.

The coordination between field staff and Branch Staff is still poor. Those employees are complaining that they are not getting the support as required from INOC, but INOC staff says, the are there to help, and will always offer technical support, although they actually do not act according to the words. Island wide field staff and also other departments which require technical support keep on complaining about the poor support from INOC. The operational level employees specially bear the view that the new transformation process has created an unclear picture of the future career with the company.

The gravity of this situation is that the resistance may not be visualized through a general observation of the process unless a deep investigation is made.

With the information collected from the interviews, it is clear that, there is resistance to the change in Pan Asia. Further, top most layer of the organizational hierarchy has no resistance to change, possibly because they are benefitted from the change done by transformation, but middle level of management and the operational layer of the company do not view the change as giving favorable outcomes to them. The gravity of this situation is that, it may affect the productivity, customer retention, customer satisfaction, employee loyalty and integrity and team spirit, which would lead organization to a blind state about the change, and finally would affect the organizations objectives, vision and mission. This has created an opportunity for the researcher to conduct a research to investigate the specific causes of the resistance to change.

 

Objectives

The main objectives of this research are:

  1. To find the factors affecting resistance to change at Pan Asia.
  2. Examine the impact of resisting factors identified upon the success of managing change.
  3. To provide recommendations pertaining to the findings.

Significance

The practical significance

Since organization has a significant sum of money in implementing the change process, they look forward to reap the benefits to the organization as a whole. As Researcher discussed earlier, Banking Field is being transforming to many developments over past two decades, and also it will be more towards change in future too, since Banking Industries merges with information technology (IT) it has brought about an information and telecommunication (ICT) era, which has become an integral to the whole industry.

The Company has already spent billions of rupees in change process and would expect to enjoy the benefits in near future. If the company is failing to identify the resistance to change, which would cause major losses to their business; it will be failing to achieve the strategic goals.

Further, this research will be able to highlight the possible actions that could be taken by companies in the Banking industry when companies undergo changes.

Academic significance

This research will be helpful to the researchers who are engaged in studies related to change management especially in telecommunication industry.

Chapter Summery

First of all research begin with the background study, researcher was studying the development of the industry as whole, and later it was funnel down to the specific relevance. However researcher found the specific trends and drastic changes of the Banking industry. Secondly research problem was identified with the study of Pan Asia. Thirdly researcher sited 3 main objectives for the research to fulfill. Finally researcher have discussed about significance as practical and academic of the research.

Introduction

Firstly in this chapter researcher would like to browse some theories and models as literature where it could be helpful to identify the relevant independent and dependent variables for further research. Secondly it will be describing an empirical research where, can get the clear picture of a similar research. And finally researcher would like to do a review of a comparison between theories and models to get the best out of it.

Literature Review

Theories and Models on change management

There are many different models of change. It is however beyond the scope of this paper to discuss them all. A selection of models has been introduced here to illustrate that various different opinions exist. This exposé will commence with the work of Kurt Lewin, whose model is considered by many as the classic model of change. The discussion will then progress through several, more contemporary models. The final model, developed by Nadler and Tushman, is considered to be of significant value, and will be explored in greater detail.

Kurt LewinLewin’s 3-Stage Model of Change

Figure ‑: Lewin’s 3-Stage Model of Change

Kurt Lewin followed this theory with a three-stage model for change. Change began with an unfreezing – by reducing the forces that maintain the organization’s behavior at its equilibrium an organization can be persuaded to change toward a new equilibrium. The next stage is moving – this step shifts the behavior of the organization to a new level where forces will once again balance out and meet equilibrium. This involves the development of new behaviors, values, and attitudes through changes in organizationalstructures and processes. The final stage is refreezing – this is where the organization locks in the new ‘status quo’, and is frequently accomplished using supporting mechanisms that reinforce the new organizational state, such as organizational culture, norms, policies, and structures. Although many of these points might be seen as common sense, research shows they are often overlooked, ignored or underestimated by change leaders. (Kotter,1995, 1996, Fernandez,2006).

3Act Model by Tichy&Devanna (1986)

Lewin’s model was heavily drawn upon by Tichy and Devanna, although they have not credited him in any of this work; probably because these three basic change principles are straightforward and used almost generically in most change models (Siegal, Church et al. 1996, 56). Their model is likened to a play, with three acts, and although it discusses organizational change, it is guised under the classification of leadership. Their model begins with Act 1: Recognizing the need for revitalization. During this stage, organization leaders must recognize that a change is needed, and then create dissatisfaction with the status quo, sufficient to induce an organization-wide desire for transition. Act 2: Creating a new vision, is the same as Lewin’s Movement stage, where a new strategic focus is sought, toward which the organization can steer and realign. Act 3: Institutionalizing change, as with Lewin’s refreezing, any transformation must be locked in, during this stage new realities, actions, and practices must be shared so that changes become institutionalized” (Tichy and Devanna 1986, 31).

three-step modelbySchein (1985)

Schein’s model is another that is developed around the work of Lewin. His three-step model starts with ‘unfreezing’, which is similar to Lewin, and includes building a desire for change and developing an anxiety gap between the present and the desired state. It also proposes an additional element, which is to create an environment of psychological safety identified with the target state to induce a willingness for individuals to make the journey. The next stage is cognitive restructuring, which is akin to Lewin’s ‘movement’. Finally, we have refreezing, which involves aligning new behaviors to one’s own sense of identity, and in alignment with others within the organization (Siegal, Church et al. 1996, 56-57).

Psychologicalcontract model by Rousseau (1989)

The psychological contract was defined by Rousseau (1989) as an individual’s belief regarding the terms and conditions of an exchange relationship with another party. Within the world of work it most often referred to the perceived fairness or balance (typically from the point of view of the employee) between how the employee is treated by the employer, and what the employee “puts in” to the job. For example, in addition to providing remuneration, the employer’s side of the psychological contract might include the provision of training, security, interest and work-life balance in exchange for flexibility, effort, loyalty, commitment and innovation from the employee. Empirical evidence has found a positive relationship between the perception of a balanced psychological contract and employees’ commitment to the organization (Coyle-shapiro and Kessler, 2000) and their trust in the organization (Robinson, 1996). In contrast, a negative association was found with the neglect of in-role job duties (Turnley and Feldman, 2000) and turnover intentions (Turnley and Feldman, 1999).

Positive assessment Coyle-Shapiro and Kessler (2000)

For example, in a study by Coyle-Shapiro and Kessler (2000) it was found that managers were more positive in their assessment of the employer’s fulfillment of their obligations than the employees were. Through creating an open working environment and effective channels of communication the manager can ensure that the expectations of both employees and the employer are clear and well communicated. The manager is then well placed to address the expectations of the employees effectively. This openness about the contract is particularly crucial within a time of change, when employees often worry that a negative change in the psychological contract may occur, for example in terms of their job security or development opportunities. The second way in which the concept of the psychological contract is useful when thinking about organizational change is that it forces manager to consider the balance of the contract. Consequently if an employer wants to make changes that will affect what employees are expected to “give” to the organization, for example a change in working hours, by implication they should also consider changing what they will offer to the employees to maintain a balance, for example increased flexibility.

(Kessler.I., 2000)

5 Stage Model by Kubler-Ross (1973)

Fundamental to the success of organizational change is the acceptance of the change by employees. Within this context, the work of Kubler-Ross (1973), who argued that all humans go through 5 stages of ‘grief’ (denial, anger, bargaining, depression and acceptance) when faced with a loss or change, has been seen as relevant and has been applied to the management of organizational change. Wiggins (2009) uses the model to help guide communication and support during the period of change, which she suggests should be tailored to the stage of change that the employees have reached.

(Kubler-Ross, 1973)

ADKAR Modelby(Anon, 2013)

Managing organizational change starts with understanding how to manage change with a single person. Among the tools available to drive individual change, the ADKAR model developed by Prosci, the world leader in change management research and content creation, is commonly used. ADKAR is an acronym for Awareness, Desire, Knowledge, Ability, and Reinforcement. In principle, to make a change successfully an individual needs:

Awareness of the need for change

Desire to participate and support the change

Knowledge on how to change

Ability to implement required skills and behaviors

Reinforcement to sustain the change

ADKAR describes successful change at the individual level and outlines the goals or outcomes of successful change. It is an effective tool for planning change management activities, diagnosing gaps, developing corrective action, and supporting managers and supervisors.(Tata Consultancy Services Limited.. Business Process & Change Management., 2013)

 

Kotter’s 8-Step Change Model

Kotter introduced his eight-step change process in his 1996 book, ‘Leading Change’. He suggests that for change to be successful, 75 percent of a company’s management needs to buy into the change, and he introduces an actionable eight-step process for implementing successful transformations.

  1. Establishing a sense of urgency
  2. Creating the guiding coalition
  3. Developing a change vision
  4. Communicating the vision for buy-in
  5. Empowering broad-based action
  6. Generating short-term wins
  7. Never letting up
  8. Incorporating changes into the culture

(Kotter J. , 1995)

 

Empirical Research

Beshwath and Jaaron (2014) have outlined the necessity of a managerial framework in change management. The study focuses on three case studies conducted in three leading companies in the West Bank and Gaza regions of Palestine.