This post continues the feature from my colleague and guest blogger, Mark Sofietti, Associate Process Architect in Advisory Services at Baker Hill, a part of Experian.
In today’s market, the banking industry seems to be changing at a very rapid pace. The current crisis that we are in, as an industry and as a nation, is forcing institutions to revisit risk management policies and procedures to make the appropriate changes needed to remain healthy and profitable. However, the current crisis is not the only reason why institutions should focus on change management. Change management needs to be appropriately handled in bad and good times. Understanding change management is always a necessity to a well-run organization. Whether it is a reorganization, a new software system, a new policy or moving to a new building, change can cause a great deal of stress and uncertainty — but it can also cause benefits.
So, as managers, you may be asking, “What can I do to ensure that positive changes are happening within my organization? What are some of the items that I should consider when I am bringing about organizational change?”
There are four necessary steps that need to be taken in order to improve the success of an initiative that is causing change to an institution. I covered two in my last post. Here are the additional steps.
3. Consider methods of change
One method of change is the education of individuals about new ways of operating. This method should be used when there is more resistance to change and when individuals lack a clear understanding or knowledge of the change being made. Education may cause the implementation to take longer, but those involved will better understand the effects of the change.
A second method is gathering participation from different levels and skill sets within the organizations. Building a team should be used when there is the highest risk of failure due to change resistance and when more information needs to be gathered before an effective implementation can be completed.
Negotiation is a method that is used when a group or person is going to be negatively affected by the change. This method could alleviate the discomfort by giving the person or group some other benefit. Negotiations could allow an organization to avoid resistance, but it may be very costly and time consuming to implement the change.
The coercion change method is when a change is implemented with little room for diversion from the plan. Employees are told what the change is going to be and they have to accept it. This method should be used when speed is of the utmost importance, or if the change is not going to be easily accepted. Most employees do not like this approach and it may cause resentment or it might cause staff members to leave.
The final method of change uses manipulation, the conscious decision to share limited information about the change that is taking place. This method should only be used when no other tactic will work, or if time or cost is major issues. This approach is dangerous because it can lead to more problems in the future.
4. Create plan of action
A plan should be created for the implementation of change to clearly address reservations and define the change strategy. It should include internal and external audiences who can be affected by the change. It is common to forget those who are indirectly impacted by the change — and these audiences (customers, for example) may be the most important. Objectives of the change need to be clearly outlined in the plan in order to understand how the new future state of the organization will look and operate. The plan needs to be communicated to all those involved so that the transition can be understood and everyone can be held accountable. The plan should be periodically revisited after implementation in order to review progress. Creating a plan of action is a very important step to ensure that those who resisted the change do not revert back to their old habits.
Achieving change is not an easy process, especially when time is not on your side. If you take a second look at the change that you are trying to implement and do the necessary planning, you have a greater chance for success than if you or your organization fails to fully evaluate the consequences.
Effective change management should be part of any financial risk management process. Take charge of your institution’s future through a calculated approach to change management and your organization will be in a better position for the next change that is coming around the bend.
