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A Case Study

Banko, a large regional financial institution, was faced with large-scale changes because of deregulation of its industry and increased competitive pressures. Market responsiveness, quality service, and cost became more important in the industry, and Banko’s costs were 10- to 20% higher than its major regional competitors. Customers favored the competition and increasingly complained to Banko of poor service and inadequate response time.

Faced with rapidly shrinking profits, Banko’s leaders recognized the need for extensive change. They started to formulate a change strategy at an off-site retreat facilitated by external consultants. The executives spent considerable time debating the impact of deregulation and increased competition, and they developed a preliminary set of corporate values that would enable Banko to compete successfully in the future. The retreat also included information from the consultants about organizational design and large-scale change. As described in the retreat, Banko’s values were identified to include: delivering services of unsurpassed value; quickly and creatively responding to customers and changing conditions; employees working as a team to improve the business continually; and a commitment to growth, development, and fair treatment of all employees.

The change process was designed to increase employee involvement in order to improve performance and develop a greater market orientation to satisfy customer’s needs.

Given the importance of the changes, the senior executives served as the steering committee. They mandated and coordinated the work of two cross sectional change teams that focused on employee involvement and market orientation respectively. Members from different organizational functions and levels comprised the two teams. The steering committee coordinated the different change efforts and linked them to the firm’s business strategy. Within weeks of announcing the change strategy, resistance to change became obvious. Middle managers denied that there was a problem. They felt that employees already had plenty of opportunities for involvement and that long term customers would remain loyal to Banko. The steering committee decided that a more realistic assessment of the current organization was needed. Consequently, the consultants were asked to develop and administer an organizational survey that would yield baseline measures about current organizational functioning and performance. This survey, periodically administered, would help assess the need for change, guide the change effort, and foster dialogue in the organization.

Because of the large-scale changes at Banko, top executives realized that much coordination and information-sharing would be necessary if it were to be successful. Thus, the steering committee chose a highly-regarded executive to manage the changes. She was given direct access to the steering committee and reported to the CEO. She would work directly with external consultants and would develop a group of internal change agents to facilitate change.

Members of the two change teams attended an off‑site orientation meeting during which members of the steering committee shared their thinking about the company’s direction and values for change. Participants received information about organizational change from external consultants and discussed the issues and choices that lay ahead. They also undertook a preliminary diagnosis of the organization and its environment and spent time in their own change teams generating statements of their mandate and plans for how the teams would operate.

The change team members also identified a primary need to communicate and get input from sources throughout the firm regarding the need for change, the new values, and the change teams’ activities. They developed a process for face‑to‑face communication throughout Banko that followed existing department lines. This orientation meeting paved the way for greater employee involvement and communication concerning the change efforts.

The consultants spent about three months developing a survey, testing and piloting it, and creating a feedback process. The survey was administered in the fourth month of the change process. Feedback began one month later.

The employee involvement and market orientation teams spent several months learning about what other companies were doing in these areas and reading relevant materials. They conducted focus groups within the company and talked to managers. They met with the consultants to discuss innovative approaches to employee involvement and market responsiveness, and they examined the survey data to uncover causes of problems.

After six months, both change teams had identified organization changes that would fulfill their mandates of achieving greater employee participation and market responsiveness. At a meeting with the steering committee, they shared these plans and identified contradictory and complementary change activities.

This meeting resulted in a jointly-developed blueprint for the change effort. This plan was subsequently discussed throughout the organization in regular staff meetings and special gatherings of interested employees. Members of the steering committee and change teams were present at these meetings to clarify issues and collect information about reactions, concerns, and suggestions.

During this time, the main methods for overcoming resistance to change were participation of employees through the various change teams and their spinoffs, and through education which the teams provided to the organization. The education was primarily geared to sharing competitive information as well as the results of the internal survey.

The main focus of the employee involvement changes was to provide each operating unit in Banko with the tools needed to develop a participative, performance‑improvement strategy tailored to its specific needs. Each operating unit was responsible for its own change effort, thus creating local change champions and accountability. Members of the units were provided with an overview of employee involvement and with training in problem‑solving, quality improvement, and work‑team design.

They were given the freedom to begin pilot efforts that were appropriate to their own work areas. To support these local change efforts, managers from the operating units were trained to facilitate the changes. These positions were filled mainly by fast-track, high-potential managers who had the credibility and power to initiate change.

The employee‑involvement change team kept track of these local efforts, responded to requests and problems, and kept the steering committee informed of the change progress and of any additional resources that were needed. The steering committee, in turn, promoted widespread communication about the change efforts.

In the meantime, the market orientation change team segmented Banko’s regional market into discrete business areas. Then it assigned business teams to each area. These teams consisted of managers and key staff members from those functions whose cooperation was crucial to meet or exceed customer needs. These business teams were headed by a marketing manager who had formal responsibility for that segment of the business. The job of each business team was to formulate approaches to meet customers needs better.

The business teams were given training and were provided with a skilled facilitator. Their first task was to gather information about customers in order to discover what they wanted and what organizational barriers prevented Banko from delivering needed services. This diagnosis resulted in several relevant changes: a more customer-driven planning process that included diverse customer input; a new “customer surveillance system” that provided good information on the cost and service performance of the company compared to each customer base; and a reward system geared to the performance of each business team.

This comprehensive change process continued for several years. The initial change efforts led to a series of modifications and additional changes. The business teams created changes in the planning process, information systems, and reporting relationships. Those changes, in turn, revealed the need for team training and for a change in appraisal and development plans.

The employee‑involvement efforts began with hygiene changes that led employees to feel good about Banko’s willingness to address employee concerns and irritants. These early efforts gradually led to greater opportunities for employee involvement and work restructuring designed to permit greater individual discretion. These changes revealed the need to modify the information system to provide comparative performance data to each work unit. This enabled employees to detect and correct performance problems quickly and effectively. In order to facilitate greater employee control, supervisors received training on how to develop and manage self‑directed work teams. Each change was designed only after much discussion with managers, employees, and staff members. Each change was followed by systematic assessment and further modification and refinement. Most changes led to others, after the impact of one change in the organization required support from other components. Likewise, pressure from Banko’s competitive external environment required additional action.

Throughout the change process, the steering committee met regularly to review progress. It continued to promote widespread communication. The attitude survey became a periodic barometer of organizational functioning and performance and an early warning system about emerging issues. It helped to spur each organizational unit to take time‑out to consider its own functioning and to develop appropriate corrective action.

Case Study Analysis

To write a case study analysis, you should (at a minimum):

  • Describe the case background. (Answer the question “What is happening?” based on information provided in the case.)
  • Describe the theory or OD rules and concepts appropriate to the case. (Answer the question “what should be happening?” based on information provided in writings about OD and in the reading for the class session in which the case is due.) In most cases, you should draw your theories or principles directly from the chapter in the textbook and cite the page in text where you have selected the major theory or OD “rule” or “concept” that you are using as a point of comparison in the case.
  • Explain the gap between “what is” and “what should be.”
  • Identify the cause and describe the importance of the gap.
  • Recommend an appropriate action plan to close the gap between “what is” and “what should be” based solidly on OD theory as described in the course text or other sources.
  • Anticipate any negative consequences that you foresee resulting from implementation of the action plan.
  • Describe which steps can be taken to avert any negative consequences that you foresee resulting from implementation of the action plan.

Feel free to be creative in your responses. However, address at least the steps listed above in any case analysis. It is very important for you to realize that Step 2 above should be grounded in the theory or principles of the relevant chapters in the textbook. (Each chapter is full of theories or principles.)

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