Change Concepts and Theories to Lloyds Banking Group - Assignment Example

Application of Change Concepts and Theories to Lloyds Banking Group Name Institution Summary Lloyds Bank’s office in London intends to change its manual practices to ensure that claims could be processed into a technology driven process. The manual methods of processing insurance claims involved significant amounts of paper and manual work that caused significant delays. As a result, the company chief executive António Horta-Osorio decided to procure Business process management (BPM) to automate claims processing. However, he had no idea about the restraining factors that hinder implement of BPM. The employees did not share his vision of the BPM project. Employees also mistrusted BPM and considered to be a cost-cutting measure intended to lay off workers. Employees were also uncertain about their future with the organisation’s insurance unit. He also failed to use his group of insurance managers sufficiently to convey a need for change fruitfully. Therefore, as Osorio was uncertain about the factors that inhibited change, particularly organisational behaviours that functioned as forces that restrained change, Lewin’s Change Management Theory is particularly appropriate for the case of change management at Lloyd Bank. The Kotter Model for change management is also suitable for use at Lloyd Bank’s strategic level to change its vision and consequently transform the organisation. It will ensure that employs regain their trust in the management. Employees will share the same vision of improving performance with the management. It will also enable the CEO to build a coalition of insurance managers to convey a need for change. Table of Contents Summary 2 Table of Contents 3 Introduction 4 Topic: Introducing BPM at Lloyds Banking Group 4 Solutions 6 Lewin’s Change Management Theory 6 Application of Kurt Lewin’s theory to Lloyds change process 7 Unfreezing Stage 7 Moving Stage 9 Refreezing Stage 9 Kotter’s 8-Step Process 10 Step I: Creating an aura of urgency 10 Step II: Building up Guiding Coalition: 11 Step III: Creating a vision for change 12 Step IV: Conveying the vision to ensure employee buy-in 12 Step V: Prompting broad-based action 12 Step VI: Coming up with short-term wins 13 Step VII: Building on the change 13 Step VIII: Incorporating Changes into the Culture 13 Conclusion 14 References 15 Introduction In the contemporary business environment, organisational leaders are confronted by unprecedented change in respect to global communication, globalised competition, changing customer demands, and quantity, type, speed, and span of change, which affect their performance results (Pryor et al., 2008). Additionally, organisational leaders have to project and make critical decisions regarding future changes, whether in the short- or long-term. Therefore, because of complex and constant change in today’s business environment, an organisational leader who reacts fast and conscientiously is bound to be successful (Pryor et al., 2008). This can be ensured by using relevant change management models or theories In the case of Lloyds Banking Group in the United Kingdom, the company’s chief executive reacting to changing insurance customers’ demands by introducing Business Process Management (BPM) system to automate claims processing. However, he was uncertain about the forces that restrained change. Employees also lacked the overall vision of improving performance and were uncertain about their future work with the organisation’s insurance unit was claims processing was mechanised. This led to resistance change. This report discusses how the company can effectively change to BPM using Lewin’s Change Management Theory and Kotter’s 8-Step Process. Topic: Introducing BPM at Lloyds Banking Group As a major commercial bank in the United Kingdom, Lloyds Banking Group also provides specialist insurance services to individuals and businesses in the country (Lloyds Bank, 2014). In a typical everyday insurance business, Lloyds Bank’s brokers bring business to the market in support of the clientele and shop around to determine an organisation that can cover their particular risks. Afterward, the company’s members underwrite insurance to the businesses. While an insurance policy would not eliminate a risk, it offers the clients with a level of security in case an accident happens. The company insures complex businesses, including airlines. Recently, contemporary business threats like climate change, terrorism, and political instabilities have underscored a need for the company to always be responsive and futuristic in its endeavors. Lloyds Bank’s office in London was supposed to change its manual practices to ensure that claims could be processed into a technology driven process. The company chief executive António Horta-Osorio was compelled to inform employees how he would push for greater efficiency. Claims settlement and Underwriting are the most significant functions of the company. In the highly competitive insurance market, speedy claims settlement is the main differentiator that puts insurers in the front position as an industry leader. Hence, Lloyds needed to enhance the operational effectiveness its claim organisations and to cut costs linked to the handling of claims. The traditional methods of processing claims involved significant amounts of paper and manual work that caused significant delays. The company needed a centralised management to facilitate processing of policy and claims documents of customers who are geographically dispersed. As a result, Osorio decided to procure Business process management (BPM) to automate claims processing. Osorio started by offering information context regarding unsatisfactory operational processes. The manual claims process was particularly inefficient as it was less responsive to customer claims leading to poor customer service. While addressing employees in the change process, Osorio failed to create a need for change. Ultimately, the employees did not share the same perspective regarding the efficiency of the claims process. Indeed, employees lacked the overall vision of improving performance. Employees also mistrusted BPM and considered to be a cost-cutting measure intended to lay off workers. Employees were also uncertain about their future work with the organisation’s insurance unit was claims processing was mechanised. Most of the employees who were used to the traditional claims process shared a feeling that they were on the verge of losing their jobs, and possible retrenched in case an automated process was implemented. Although Osorio attempted to work at first with the employees, he failed to use his group of insurance managers sufficiently to convey a need for change fruitfully. He needed to take into account multiple perspectives to enable him to create a compromise on the need for change in addition to a method of change. He also needed to influence employees that a significant problem exists in the company that needs to be resolved and the identified solutions that should be integrated. Solutions Lewin’s Change Management Theory As Osorio was uncertain about the factors that inhibited change, particularly organisational behaviours that functioned as forces that restrained change, Lewin’s Change Management Theory is particularly appropriate for the case of change management at Lloyd Bank. Kurt Lewin’s theory can be applied in the change management process at Lloyds to gain an insight into how human behaviour’s relates to change and patterns characterising employees’ resistance to change. The theory is made up of three separate phases described as unfreezing, freezing, and refreezing (Lunenburg, 2010). The theory is intended to discover elements that can hamper effective change process or forces that restrain change, as well as those that can facilitate change. Within the context of Lloyds, if the CEO and the entire management at the London office can effectively understand the behaviours that can facilitate or restrain change, they can work toward strengthening the driving forces to facilitate successful implementation of the claims processing technology. Application of Kurt Lewin’s theory to Lloyds change process Unfreezing Stage During this stage, Osorio should identify the change focus. In particularly, it means implementing an automated claims processing tool. The main components of this stage include communicating with key stakeholders, such as departmental head, frontline employees, and administration. Because of a project of this magnitude requiring implementation of the automated claims process in subsidiaries of the company in Wales, the company should have a comprehensive plan prepared. Use of Lewin’s Change Management theory to help implement the technology in the company can assist to facilitate acceptance by frontline employees by inviting them to participate in all areas of planning and implementing the project (Hayes, 2002). The manager would need to describe the drivers for change at the company. The need for change would originate from evaluating organisational operations against their outputs. As the claims process is not efficient and leads significantly to poor customer service, there is a need to change the traditional claims processes for a more effective one. As the company’s chief executive is neither resistant nor complacent to change, he should consider an opportunity to improve efficiency by adopting technology. He could come to this realisation by assessing the holistic system failures, such as the slow response to customers and poor customer service (Hayes, 2002). Ability to create a ‘buy in’ from employees in the frontline would build autonomy and a sense of ownership of the technology, which is crucial for the success of the project. It would be vital for communication lines to be left open to allow the identified stakeholders to easily communicate, as this would create a feeling of security and trust in them as regards the targeted change. Lewin’s theory is critically suited for reducing stakeholder fears and resistance as well as to change by helping the company’s management to develop a comprehensive plan that takes important stakeholder interests and by encouraging active participation in managing change. By including frontline employees in the decision-making processes, it would enable them to feel empowered, which would, in turn, assist in overcoming their resistance to change. They would also develop an understanding of the project’s significance and how it would bring about customer satisfaction. Osorio will need to set up roundtable discussions while aiming to figure out the restraining or driving forces and to discover possible barriers that should be prevailed over. Within this context, examples of restraining forces may include employee resistance to using computerised devices, a likelihood of workarounds, insufficient computer skills in operating the automated claims process, and loss of trust in the management. On the other hand, driving forces consist of forces that would facilitate moving the project to full implementation. Some of the expected driving forces include sufficient investment in the implementation process by acquiring adequate finances, appealing from support from the executive management, and effective management of time. Moving Stage This stage embodies a stage of actual change. It is characterised by actual planning and implementing of the change process (Hayes, 2002). Implementation of an automated claims process across the organisation would demand sustained effort from varied teams, including programme managers, claims officers and information technology officers. As the project affects all departments concerned with processing claims from clients, all heads of the concerned department should be included in the planning and implementation process. This will create a feeling of ownership of the project across all concerned departments. Specific areas worth considering during the implementation process could include training the heads of department and employees from their departments on how to operate the new claims processing system and setting up an appropriate timeline for implementing the project. At the same time, a project leader should be. Refreezing Stage Finally, the process of refreezing the changed practice happens and contributes to a period of evaluation of the project (Lunenburg, 2010). During this stage, associated organisational norms or policies are set up to consolidate and reinforce change. For instance, Osorio can come up with policies that guide the use of automated claims processes. This will ensure that technology and employees on the frontline provided adequate support until the new project is considered to have been successfully implemented and that employees are generally at ease with the technology. In the end, once the project is completed and in operation, Osorio should evaluate the problems experienced and the successes attained all through the change management process. Lloyd Bank could then use the findings to implement the automated claims process in other subsidiaries. Kotter’s 8-Step Process The Kotter Model for change management is suitable for use at Lloyd Bank’s strategic level to change its vision and consequently transform the organisation. It is appropriate for the company as employees lacked the overall vision of improving performance. Employees also mistrusted BPM and considered to be a cost-cutting measure intended to lay off workers. Employees were also uncertain about their future work with the organisation’s insurance unit was claims processing was mechanised. Osorio had also failed to use his group of insurance managers sufficiently to convey a need for change fruitfully. Step I: Creating an aura of urgency Employees who performed claims processing were at first indifferent to the prospects of having a new technology. In fact, it is only departmental heads who were motivated, as they were concerned about the high rate of customer delays and poor customer satisfaction. Because of disparities in understanding the need for change, Osorio in conjunction with the departmental heads should begin with creating a sense of urgency. They can begin by explaining to employees in their different departments of the implications for not adopting the technology fast. They should also be made to understand that they are likely to be fired if they do not bring about improved employee satisfaction and organisational performance. They should be able to understand that they were purposely hired to make a turnaround and how the new technology will help them achieve that objective. This can effectively be ensured once the management prepares a communication plan that uses multiple channels, through which the departmental heads can be used to directly and candidly inform the employees about how customers are negatively affected by the current system and why the company must now implement change. In addition to providing facts to awaken the zeal for each on each of them. Creating awareness for a need for change would prepare the organisational members psychologically for change (Lunenburg, 2010). The process of creating awareness should be facilitating by providing proof of the degree of efficiency or discontent with the status quo. In such a situation, Osorio should change himself into a transformational leader to influence change. An alternative way of making sure that employees identify with a need for change is by focusing on factors with a potential to impede such recognition or even trigger resistance to change. For instance, the existing organisation culture may inhibit an attempt to create awareness of the need for change. As an alternative, the CEO may improve the perceived need for change by creating a dominant vision for change. Step II: Building up Guiding Coalition: After a need for change is established, it would become vital to direct the attention of the organisation toward change by creating awareness for changing and eliciting support for the identified change (Lunenburg, 2010). Osorio would first need to create a feeling of dissatisfaction with the current circumstances and start seeking for concurring individuals within the organisation. Osorio, as the change agents, would then need to form partnerships with the departmental heads with the view of increasing pressures for change by establishing coalitions. While Lloyds’ London management team already has a coalition in place, it cannot sufficiently push for Osorio the projects, as it is only made up of middle-level and top level managers. For this reason, there should be a more cross-level team made up of diverse groups of members of the organisation, such as representatives of frontline employees, supervisors, middle-level managers and the executive management. This is appropriate, as it will enable employees to feel more in control and to acquire a sense of ownership in the project. Therefore, the human resource department will need to work with middle level and executive level managers to select key opinion leaders (KOLs) within the organisation. Step III: Creating a vision for change Implementing a claims processing technology is inherently reactive and problem-solving. While it is certainly the right decision for Lloyds, it does not provide goals that appeal to employees (Lunenburg, 2010). Therefore, the management should come up with a creative vision that integrates the individual aspiration and needs of employees. For instance, the vision should outline how employees are likely to gain from the new technology, about improving their performance and that of the organisation. Step IV: Conveying the vision to ensure employee buy-in The next focus of the management is to make sure that virtually all members of the organisation identify with and agree with the vision (Lunenburg, 2010). At this stage, optimal communication of the vision is paramount to avoid any possibility of inconsistency in communication. For instance, rather than just communicate the vision using one memo, more channels such as interdepartmental meetings, presentations and emails should be used. The idea is that the organisation should use all appropriate channels that can reach the employees. Step V: Prompting broad-based action Osorio should hen focus on eliminating any barrier that may hinder employees from performing their work in the best way possible. For instance, some of the possible barriers that can be expected include supervisors who are troublesome. These kinds of supervisors may have interconnected habits that hinder change. While they may not intend to undermine the efforts for change management, they may be too confrontation, which makes it difficult for them to get along with the employees. Hence, the management should have an honest dialogue to elaborate to supervisors a need for greater employee levels and why they should compromise their approaches to achieve this objective (Lunenburg, 2010).  Step VI: Coming up with short-term wins The management should identify vital improvements they expect to happen in the initial 3 to 6 months. Identification of such short-term wins will ensure the success of the entire change vision by providing employees with significant motivation. Indeed, when employees attain these wins, the wins will function as significant rewards as they will provide positive feedback that improves employee motivation. Step VII: Building on the change Despite the small wins, efforts to implement change should not stop with the early results. Instead, the intensity of change should be increased by creating platforms that promote continuous improvement. This could start with creating cross-functional teams to assist with changes. Proof should also be consistently be provided to show that the project is on the right course (Mento et al., 2003). Step VIII: Incorporating Changes into the Culture In the last stage, each milestone attained toward full implementation of the project should be elaborated to make the employees derive satisfaction from the results. Additionally, the organisation should be transformed into a learning organisation (Lunenburg, 2010). This can begin with making departmental heads as mentors or trainers who can arrange for regular workshops to retrain employees on how to use the claims process tools to ensure customer satisfaction effectively. In so doing, the positive momentum would be sustained. Conclusion Lloyds Bank can effectively change to BPM using Lewin’s Change Management Theory and Kotter’s 8-Step Process as the traditional methods of processing claims are causing significant customer dissatisfaction. The two theoretical frameworks are particularly relevant for the company’s situation, as the CEO is uncertain about the factors that inhibited change, particularly organisational behaviours that functioned as forces that restrained change. On this account, Lewin’s Change Management Theory is particularly appropriate for identifying the restraining forces and capitalising on the driving forces to implement change. Kurt Lewin’s theory can effectively facilitate change management process at Lloyds to gain an insight into how human behaviour’s relate to change and to identify patterns characterising employees’ resistance to change. The Kotter Model for change management is also suitable for use at Lloyd Bank’s strategic level to change its vision and consequently transform the organisation. It will ensure that employs regain their trust in the management. Employees will share the same vision of improving performance with the management. It will also enable the CEO to build a coalition of insurance managers to convey a need for change fruitfully. The mode, would also engage all internal stakeholder to work toward emphasising the driving forces and weakening the restraining forces so that an automated claims processes is successfully implemented without using wasteful workarounds with optimal employee investment in ensuring positive project outcome. References Hayes, J. (2002). The theory and practice of change management. New York: Palgrave Macmillan Lloyds Bank. (2014). Scottish Widows plc and Clerical Medical Investment Group Ltd. Retrieved from http://www.lloydsbankinggroup.com/globalassets/documents/investors/2014/fitch_sw_2dec2014.pdf Lunenburg, F. (2010). Approaches to managing organizational change. International Journal Of Scholarly Academic Intellectual Diversity, 12(1), 1-9 Mento, A., Jones, R., Dirnorfer, W.(2003). A change management process: Grounded in both theory and practice. Journal of Change Management, 3(1), 45-59 Pryor, M., Taneja, S., Humphreys, J., Anderson, D. & Singleton, L. (2008). Challenges facing change management theories and research. Delhi Business Review, 9(1), 1-20. Read More