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ISLAMIC UNIVERSITY IN UGANDA

FACULTY OF MANAGEMENT STUDIES


DEPARTMENT OF BUSINESS STUDIES
PROGRAM: MBA
COURSE UNIT: ORGANISATIONAL THEORY AND BEHAVIOUR
STUDENT NAME
KHARIM AINOMUGISHA: 115-035053-14078

ASSIGNMENT
Interview the manager or owner of a local business/organization. Ask about any
recent changes that the organization has made. Why were they undertaken? How
were they managed? How successful have they been?

Introduction
Change in an organization refers to the movement of an organization away from its present state
and toward some desired future state to increase its efficiency and effectiveness.
According to Kanter (1992), change involves the crystallization of new possibilities (new
policies, new behaviors, new patterns, new methodologies, new products or new market ideas)
based on the re-conceptualized patterns in the institution. The architecture of change involves the
design and construction of new patterns, or the re-conceptualization of old ones, to make new,
and hopefully more productive actions possible.
Lending support to the above view, Kanji and Moura (2003,) state that change can be numerous
and could also include changes to procedures, structures, rules and regulations, technology,
training and development and customer needs within organizations.
Change is therefore considered to be a shift in behaviour of the whole organization.
It is believed that highly performing organizations are those that are constantly changing and
thus becoming more effective and efficient.
According to Lewins Force Field theory of Change, a wide variety of forces arise from within
the organization, its structures, environments and systems thus resulting into changes which are
categorized under two types;
Evolutionary Change; which is gradual, incremental and narrowly focused. It is not drastic or
sudden but rather planned in a constant attempt to improve, adapt and adjust to the new structure.
On the other hand, revolutionary change is the exact opposite. It arises as a result of unexpected
changes in the environment and impending disaster if changes are not effected. It is rapid,
dramatic and broadly focused to overhaul the entire system. Radical goals are set under this
wing.
Change is not an easy task which therefore calls for skills in managing change. This then
necessitates management to put in place certain aspects to control, monitor and manage the
changes in offing. An assessment of the need must be conducted, a problem recognized and
modes on how to solve it identified. Involvement of stakeholders is very key especially at the
stage of implementation. Finally, evaluation is done to assess the positive and negative impacts
of the changes instilled.
However, even with all the skills in place, change still remains an interesting phenomenon. Beer
and Nohria (2000) stated that change remains difficult to pull off, most organisations have had
low success rates and the brutal fact is that about 70% of all change initiatives fail. Yet change
must be undertaken or organizations will face extinction according to Macredie, Sandom and
Paul (1998).

CASE STUDY: Centenary Rural Development Bank Limited-Mbale Branch


In 1993, Centenary Rural Development Bank Limited was created as a financial institution to
serve the economically disadvantaged people especially in rural areas and contribute to the
overall economic development of the country. The Banks activities included lending to small
and medium enterprises and large corporations to reach the middle and higher-end markets.
1998, Centenary Bank opened a branch in Mbale town. Mbale was and is one of the major
developing townships in Uganda and had promising prospects for Bank Business.
However, the performance of Mbale Branch left a lot to be desired. Employees had put in place
artificial access barriers which prevented the illiterate people from accessing services in the
Bank. Delays in crediting customer accounts were abnormally high and several lawsuits were
filed against this branch. The branch was constantly making loses due to fraudulent deals
orchestrated by the branch managers and supervisors in connivance with their employees. There
were constant in-fighting between employees and this impacted heavily on the performance of
the bank. Most of their employees were recruited locally and were residents of the area. The
performance of these employees was poor. There were high levels of absenteeism, mal
administration, poor customer relations and lack of professionalism in the Bank. Only Catholics
could be employed in Centenary Rural Development Bank, Mbale Branch. This had created a
hierarchical mode of operation, communication between employees was poor and inter group
conflicts were on the rise. Time wastage in gossip had impacted on employee performance
negatively. The operations in the Bank were more of a family business than a public company
interested in giving proper customer service and earning a profit. At one point management
wanted to close this branch because it was performing dismally and this had impacted on the
performance of the entire Bank and its public image.
Ahimbe Edgar was later appointed as the Branch Manager. The new Branch manager spent three
months studying the problems of this branch. He finally saw light and undertook the following
changes;
Recruiting from a diverse populace
Mbale Branch had been dominated by staff from one region, Bugisu as well as one religionCatholicism. The dominance of this group was visible from the outset yet its performance was
dismal. Mr. Ahimbe Edgars first task was to request for management at the Head Office in
Kampala to recruit new staff and distribute the current staff to different branches across the
country. He advised management to centralize recruitment at one place and then share employees
accordingly. Recruitment by branches themselves was discouraged. This enabled management to
recruit different categories of individuals without any form of discrimination. The new staff at
branch were diverse in nature; from all works of life.

Training of all staff at the Branch


Both new and old staff underwent training through workshops and conferences on topics like
customer service, professionalism, ethics and corporate governance. Change and diversity
management were one of the issues discussed and all staff got acquainted with what yet to
happen at the branch. All staff were trained to accept change and reform especially when its for
the good of the organization that they serve. They were trained to be psychologically flexible in
all aspects of life.
Technological advancements
The system at the Branch was very slow and had registered several breakdowns. It was
unreliable and it could make loses. Similarly customers were dissatisfied with this system
because it could take long to post deposits on their accounts, detecting suspicious transactions
was hard.
A new system had to be installed and staff were trained on how to use it. Internet banking and
ATM machines were installed to assist staff and overhaul pressure on them.
Goal setting and motivation
Incentives were introduced staff who hit their targets and emphasis on quality was embedded in
all workings at the Branch. Promotions were made on merit. Recognizing the banker for the
week, month and years awards were scheduled which came with several advantages.
Breaking bureaucracy
Previously, supervisors and managers had separate offices from those of their subordinates. This
mode had curtailed communication in the bank and had orchestrated bureaucracy at all levels.
The new manager was quick to notice this. He introduced super Thursdays where by each
supervisor had work at the teller together with his subordinates and the best performing teams
could be given a coupon to go to a hotel for a meal and recreation activity. This was done in a bid
to promote friendly relations among all employees.
Celebration of all employees birthdays was a must and all staff had to attend. Office cubicles
were demolished and all supervisors except the branch manager had to sit in the open with the
rest of the staff.
This was designed to promote efficiency, create a horizontal form of organization and reduce
bureaucracy and the hierarchical nature of doing business.
By the close of 2004, Mbale Branch was one the promising branches of Centenary Bank. It
customer base had increased. Two ATM machines were installed to serve the increasing number
of customers better. This branch has even outcompeted some of its rivals in business forcing

them to close and open up branches in other townships. The results of the reform process were
impressive, providing strong evidence that change can happen for good.
REASONS FOR THE CHANGE
Leana and Barry (2000) posit that organizational change is aimed at adapting to the environment,
improvement in performance and changes in employees behavioural patterns at the work place.
Greenwood & Hidings, 1988 believe that for the sake of survival, growth, and having a
competitive advantage, organisations have attempted to anticipate and adapt to changes through
strategies including organizational redesign which often embodies changing the very culture of
the organization.
Lewins Force Field theory of Change, indicates that change increases the level of performance
in any organization once its undertaken;

In every organization, change is undertaken because of the following;

Setting goals and defining the future state desired by the organization or changing
conditions;
Diagnosing the present conditions of the organization, in relation to the objectives from
above;
Defining the activities which assume the transformation process;
Development of the strategies and action plans for managing the transition during the
change process;
Ensuring the survival of the company;
Identification of competitive advantages that will set apart the organization from other
competing organizations.

On top of the above, Centenary Bank, Mbale reformed because of the following;
Stiff Competition from other Banks
Competition is often a key driving force behind major organisational shake-ups, as the need to
stay relevant and competitive in a saturated market is key to business success. Banks like
Stanbic, Barclays, Housing Finance were claiming most of the would customers for the
Centenary Bank. This therefore called for the need to stay up-to-date and appear more
professional compared to rival companies, as well as modern and in-touch with todays consumer
needs.
Customers reactions and public outcry
The banking sector is built on a sense of trust, once it is lost it is hard to recover it. Several
customers were dissatisfied with the services at Mbale Branch which therefore called for a
responsive to shift in the working environment at the branch especially to become more
customer focused.
Need to Improve Processes
Several unnecessary technicalities which had hindered customers from the accessing the bank
had to be removed. These technicalities had also created a stressful environment for the
employees. This was done to become more efficient and eliminate loss of customers to other
financial institutions.
Shifts in Technology
Innovations in technology forced Mbale Branch to change adapt to the new technological
changes. These shifts made it easy for customers to track their transactions, flexibility in banking
services which called for adjustements in the services offered and the speed at which they were
operating. Employees who have never used e-systems had to be trained to operate the new
system and others had to be laid off.
Government Regulations
The Banking business in Uganda is highly regulated by Bank of Uganda. If several complaints
are raised against an institution, it may attract closure of the entire business by Bank of Uganda.
Thus the reforms were hastily undertaken to save the image of the entire centenary bank as well
as to prevent it from attracting penalities and closure. Newly mandated safety procedures had to
be put in place. Laws on equal opportunities and non-discrimination had to be advocated for and
implemented. Gadgets to detect cases of fraud had to be installed to prevent the Bank from
breaking the law.
Need to minimize losses and increase profits

The bank was making huge loses due fraudulent deals undertaken by the branch supervisors as
well as a sloppy system. Thus need to minimize operating costs and bettering the firm and
overcoming competition drove this change.
How were these changes managed?
Change Management (refers to any approach to transitioning individuals, teams, and
organizations using methods intended to re-direct the use of resources, business process, budget
allocations, or other modes of operation that significantly reshape a company or organization.
Organizational Change Management considers the full organization and what needs to change
According to Lewin (1951), change occurs in three steps; unfreezing, moving, and refreezing.
Lewin viewed change as deriving from two forces, those internally driven (from a persons own
needs) and those imposed or induced by the environment. Figure 1 demonstrates Lewins 3-Step
Model for change.

Figure 2: Force-Field Analysis Theory (Lewin, 1951)


Also, according to Beer and Nohria (2000), many organisations fail in their change initiatives
because some senior personnel tend to rush these initiatives in their organisations, losing focus
and becoming overwhelmed by the literature advising on why organisations should change, what
organisations should strive to accomplish and how organisations should implement change.
Thus, it can be argued that implementing change in both private and public organisations is no
easy task to accomplish.
Change at Mbale Branch was managed by carefully undertaking the following steps;
Ensuring that there was Need for change and convincing all those involved. Leaders must
verify and persuasively communicate the need for change. People had to be convinced of the

need for change and suggest beginning by crafting a compelling vision for it that is easy to
communicate, appealing, provide overall direction for the change process and serve as the
foundation from which to develop specific strategies for arriving at a future end state. These
new prospects were designed away that offers hope of relief from stress or discomfort and were
thus acceptable to all stakeholders in the change movement.
Planning; a clear plan or course of action and strategy for implementing change was developed.
This plan expressed what needed to be transformed with well streamlined goals and a plan for
achieving them. This plan was clear; it identified obstacles, and proposed measures for
overcoming these obstacles.
Communicating the Change
Communicating change should be structured and systematic. Employees are at the mercy of
management to inform them of changes. When there is poor communication and the rumor mill
starts spreading rumors about change, it can create resistance to the change. Being proactive in
communications can minimize resistance and make employees feel like they are part of the
process.
Ensuring Top-Management Support and Commitment. Change cannot happen without the
support and commitment of top management. This is because change involves making crucial
decisions which need the blessing and endorsement of top managers. This therefore called for a
coalition between the branch leadership and management in Kampala.
Build the guiding team: New staff were trained and made reliable. Getting the right people in
place with the right emotional commitment, and the right mix of skills and levels was one of the
reasons for the success that was registered.
Creating partnerships with the External Stakeholders. These included political overseers
and key customer. This was done to improve the dwindling trust levels within the community.
Gathering enough Resources. To have an impacting change, sufficient resources to support the
process are need because change is not cheap. It comes with several trade-offs. Planned
organizational change involves a redeployment or redirection of scarce organizational resources
toward a host of new activities.
Ample funding is necessary to staff implementation agencies and provide them with the
administrative and technical capacity to ensure that they achieve statutory objectives.
Institutionalization of Change and Pursuing Comprehensive Change. This called for
integration of change in all the internal and external workings of centenary bank, Mbale Branch.
This started with an equal opportunity recruitment system, professional training, technologically
enhanced modes of work and corporate structure businesses.

Follow-ups
Whenever a change is made it is always good to follow-up after implementation and assess how
the change is working and if the change delivered the results that were intended. Sometimes
changes exceed target expectations but there are occasions that changes just dont work as
planned. These were undertaken and adjustments made until the desired result was achieved.
Removing Barriers
Sometimes employees encounter barriers when implementing changes. Barriers account for the
increasing stress levels in organizations and affect employee performance. These were identified
along the way and removed or minimized.
Encouraging determination and persistence. This was done through progress reporting which
highlighted the achievements so far and morale boosted the teams.
Making change stick: Change was reinforced in all aspects of the organisation including
recruitment, promotion and all these were weaved into the culture of the organization.
Monitoring, and counseling for the workforce was undertaken to reduce on the stress that
comes with change. Counseling was specifically undertaken against those who were resistant to
change.
Countering resistance from the employees of company and align them to overall strategic
direction of the organization
Effective communication that informs various stakeholders of the reasons for the change and
the benefits of successful implementation was also undertaken.
Flexibility in procedural aspects was also undertaken to make employees embrace change with
ease.
CHALLENGES
Balogun & Hope Hailey, 2004; Beer & Nohria, 2000; Grover, 1999 assert that the success rate of
change initiatives is less than 30%.
Resistance from employees
Even though change is implemented for positive reasons employees often respond negatively
toward change and resist change efforts. This negative reaction is largely because change brings
with it increased pressure, stress and uncertainty for employees. According to Judge and Douglas
(2009) the reasons for this resistance range from a lack of understanding surrounding an
organisations capacity for change.
Heavy workload and time consuming

Change affects all aspects of an organization, including strategy, internal structure, processes,
peoples jobs and attitudes and overall culture organizations. This is avery huge task who is hard
to undertake. And an employees perspective, any form of organisational change can impact
directly or indirectly upon their personal lives and the nature of their work. Its impact can be
experienced through changed working conditions, benefits and future aspirations.
Misunderstanding the whole concept of change
It must also be acknowledged that as a phenomenon, change in some organisations is a process
misunderstood by many stakeholders, for whom there are no ready-made guidelines to an
understanding of change. Employees have to struggle to understand and modify practices and
processes that are complicated, in a constant state of renewal, and difficult to comprehend
(Fullan 1997).
A lot of time is needed to align the interests of the company with those of the individuals and in
explaining to them what has to be done.
Financial implications
To make sure that change sticks and becomes successful, a lot of resources are needed both
human and financial. Not all these resources are readily available. The process of mobilizing
these resources is not an easy one which complicates the whole process further. This increased
expenditure featured as another phenomenon.
Poor performance
During the process of changing from the old system to the new system, poor performance was
registered. Many employees deserted the organization at the time of need. There were
inconveniences to customers who were very dissatisfied, making the work hard and tiresome.
Lack of commitment and motivation
This was manifested in the initial stages of implementing change and had proved futile to solve.
Most employees appeared to be okay with the changes but were not ready to partake in the
implementation process.
Distractions from other activities
The organization was going through a major shakeup; however there were interruptions from the
public and competitors who did not wish well the organization.
According to Newton, every action has an equal and opposite reaction. Therefore these
challenges were expected to explain the magnitude of these changes.

Successes
Losses due negligence from employees or intentional fraudulent deals were minimized. Very few
cases of fraud have been registered over the years and are phasing out slowly by slowly.
Centenary Mbale Branch has also recorded improvements in the quality of services offered to the
customers. Professionalism was achieved at all levels.
In some process areas, there was a greater level of trust among managers and supervisors, and
there are fewer conflicts regarding its employees.
The bank has also managed to put up stiff competition against its competitors. Others like
standard chartered were even forced to leave the area.
Honesty in communication and unity among employees was also achieved. Team work and
commitment to work was another aspect manifested by this movement.
There has been a continual in form of fine-tuning of processes mean creating better ways of
performing at the bank. This progressive move should continue to be encouraged.
Although the bank has an open recruitment policy and adheres to equal opportunity laws, it has
stiff failed to trust women with supervisory level roles. Only men are recognized as managers
and supervisors, an indicator that the move for diversity in recruitment fell short of the required
essentials.
Similarly, suspicions on discrimination against religious affiliation in recruitment are still high.
Though the banks performance has generally improved, individual employee performance is
still low. More changes are still needed to create an efficient working environment as well as a
customer friendly organization.
Conclusion
In conclusion, Centernary Bank, Mbale Branch underwent the above changes because to survive
otherwise other banks would have taken advantage of the laxity at the Branch. These changes
came as a blessing to the bank. Its efficiency has since improved and it commands a place in the
Banking sector.

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