1. Actions/Steps/Events to Plan and Create Short-term Wins

a. Create visible performance improvements

b. Acknowledge and reward employees involved in improvements

2. Actions/Steps/Events to Consolidate Improvements and Produce More Change (i.e., advance the change project)

a. Use credibility from early successes to change additional systems/structures that do not fit the new vision

b. Develop employees/recruits who can implement the new vision

Organizational Change Case Scenario

Rural Bank, Inc. (RB) is a $5 billion financial services organization. For the past 50 years, RB has focused exclusively on the lending of money to farmers and ranchers for the purchase of land and equipment (tractors, cotton pickers, etc.). They operate solely in Texas and have an office in every county within the Sate. The average office is staffed with four customer service representatives (CSRs) who perform the majority of clerical duties, and four loan officers who take credit applications, analyze them, and make loan decisions. RB is a traditional lending institution where current and potential customers drive to their local branch and request funds as needed. That is until now.

Growth in the agricultural sector has been nonexistent for several years. The truth is that the bank is in decline, as new business is roughly 5% of the asset base per year while payoffs result in nearly 10%. The firm must grow rapidly and consistently or the bankruptcy spiral will continue. The leadership team understands the dilemma and has made the decision to undertake the needed revolutionary (radical) change to position the firm for growth. In response, YOU have been brought into the firm as a leadership team member to function as the change agent.

The situation is this First, a new technology has become available (radical change is often initiated by innovation). It is credit scoring software. It is reasonably cheap and has proven reliable in predicting loan repayment and maintaining credit quality. After a review of RBs current trends, it has been determined that 90% of current lending could be accomplished satisfactorily with the new software.

This software would assist in RBs change from a traditional banking culture to that of a very proactive sales culture. No longer would loan officers sit behind desks and wait for loan requests. They would have company cars, laptops, portable printers, etc. In essence, they would now be money salespeople. Instead of passively waiting, they would be outside calling on potential clients in search of the desperately needed new business. Of course, such a dramatic cultural shift, predicated by the change, will have numerous implications for the company.

For one, the change means the structure must also change (The strategy must dictate the structure, not the other way around). With the new business model, there will be no need for an office in every county. In fact, the company expects to move from the current 254 offices to only 20 strategically located around the State, as customers will no longer be expected to come to their local office. Of course, this impacts personnel. In particular the number of CSRs will decline and many of those remaining will likely have to relocate to the new regional area offices.

The bigger impact, though, will be on the loan officers. Most have been with the organization for many years and valued because of their exceptional abilities with credit analysis. The new system, though, means that actual human credit analysis will only take place with a small percentage of loans. Thus, the decision has been made to have one underwriting center in Dallas, staffed by only 40 business analysts (BAs). There are currently approximately 1,000 loan officers. And although we only need 40 of them doing hands on analytical work, we need the other 960 (and possibly even more) out hitting the pavement looking for new business (business development officers). Of course, some of these newly labeled BDOs can make the transition from underwriter to money salesperson without a great deal of training. Others will make the transition with much training and great effort. Unfortunately, others will simply be unable to make the change, albeit through no fault of their own. It is safe to assume there will be significant resistance to change that you will have to overcome.

In response, our HR function will be greatly impacted. Not only will we need to hire many more employees, we need to make sure they have the newly valued skills the ability to sell money is now more important than differential credit analysis. Moreover, these money salespeople will need to be compensated differently, with a portion of their income tied to their sales performance. Branch managers must now become effective sales managers. But we must also make sure that everyone, CSRs, BDOs, and BAs are all on the same page of seeking new business for growth and that all are treated fairly not the same but equitably. Because of the change, it is reasonable to assume that every HR function training, development, compensation, benefits, etc. will be impacted for every position in the company. Of course, these levels of broad change may also result in lowering the morale of many in the organization, so we need to make sure this is addressed.

In addition, the leadership team has made the decision to move beyond agricultural lending and pursue home loans in their attempt at rapid growth. Of course, all past suppliers, advertisers, etc. are solely focused on farming and ranching. The first home loan advertisement they ran had a tractor in the background and did not go over well with suburban home buyers. In response, RB has decided to go with a strategic business unit structure. They will basically have two separate organizations under the corporate umbrella of RB. This will necessitate a separation of sales and underwriting into agricultural markets and home loan markets, with personnel dedicated solely to each. This will have great impact in most every functional discipline in the firm loan accounting, marketing, finance, etc.

And this is the point. While we often think of change in terms of going from point A to point B, we rarely consider the extensive reach of the implications organization wide. At this point, you can assume the leadership team has completed the proper analyses and their course of action is needed and in the best interest of the firm, so that part of the heavy lifting is done for you. Now the real issue with organizational change management YOU must develop the plan to implement the needed changes. You must maintain acceptable morale by properly educating the employees. You must effectively communicate a compelling vision of the change to all organizational personnel (remember transformational leadership?). You must foresee the implications upon and reactions by every functional discipline within this organization. You must create a comprehensive plan, complete with action steps and timelines, to educate, communicate, implement, and institutionalize the needed changes. As part of the plan, I want to see support (from the journal literature) for your methods. The survival of this firm, and the livelihoods of its many employees, is squarely placed upon your shoulders.