Question 1) Explain the term ‘corporate (or organizational) culture’, and discuss its importance to the operational success, or failure, or organisations.
Corporate culture, also known as organisational culture is ‘the system of shared values and beliefs that develops within an organisation and guides the behaviour of its members’ (Schermerhorn,et al, pg 45, 2004). Robbins, et al, pg 70, 2003, explain that culture is a perception, and people perceive culture to be what they see hear or experience within the organisation. This is one reason that corporate culture is so important, as it just becomes part of daily routine or ‘the way we do things here’ (Schermerhorn,et al, pg 45, 2004). Therefore if these common practices are good practices there is a strong chance the organisation will be more successful.
The culture of an organisation is very important and can for a large part determine the success of organisations. As culture is a perception, it is concerned with how its members perceive the organisation and not whether they like it, (Robbins, et al, pg 70, 2003). If its members like the culture, the organisation is more likely to succeed. Organisations that have a good culture often perform at high levels, which also corresponds with staff morale. Robbins et al, pg 73, 2003 refer to a case study involving Virgin Blue, who have a different recruiting policy and job roles than other airlines in Australia. Virgin Blue want their staff to show their outgoing personality and interact with their customers during flights. Virgin Blue staff say morale is high and management gets on well with the workforce. The perception of Virgin Blue is that it is a little different to the other airlines in Australia, and that it is a fun outgoing organisation to be a part of, which is a perception Virgin Blue appears to promote and are proud of.
Question 2) Examine and summerize the cultural shifts that occurred on the ANZ over this period and the benefits they brought to various stakeholders.
The ANZ like most banks in the late 1990’s had a poor public image. Banks were criticised for bank fees, branch closures and scandals, as a result morale for bank employees was also poor.
ANZ conducted a staff survey, which confirmed morale was low and staff satisfaction was below 50%. The survey results were quite clear that staff did not feel valued in their workplace, and employees were asked to nominate words they felt best describes the ANZ bank. Words rating at the top of the list were cost reduction, profit and shareholder value.
The ANZ initiated a program, ‘the breakout program’ which was designed to shift the culture, as the bank wanted to create a new public image or perception that distinguished them from other banks. Executives of the ANZ realized a shift if employees mind set was needed to regain the trust of their staff and assist with this intended culture change. This was done with various workshops and subsidising computers for its staff, which in particular was very well received by its staff.
As well as increasing staff morale by subsidising computers, staff were given the opportunity to use skills they had acquired by assisting and educating customers with money matters. This was something staff were very passionate about, and by giving them the opportunity to complete such duties may have been a factor to increased morale.
ANZ claim a complete transformation in organisational culture, believing their culture has changed for ever. Judging by further surveys conducted since the change in culture, staff morale is high, and this also coincides with customer satisfaction.
Question 3) Evaluate the leadership style/s that would have been used by McFarlane and other senior executives in ANZ to implement this cultural shift in the ANZ and describe other leadership styles that may not have been beneficial in doing so.
It is quite likely that more than one leadership style or a combination of styles was used by ANZ to initiate its change in organisational culture.
One particular style that may have been used is the path-goal theory. ‘A leadership theory that says it is the leaders job to assist their followers in attaining their goals and to provide the direction or support needed to ensure that their goals are compatible with the overall objectives of the groups or organisation’ (Robbins, et al, pg 577, 2006).
At the ANZ bank staff morale was low and its public image poor, and to change that McFarlane used the path-goal leadership style to attempt to increase morale, which would also lead to enhancing its public image. The path-goal theory discusses input from staff, this was done by taking information from the staff survey, and gaining an understanding of what is important to staff. Change was then implemented so staff could start working in an environment which they feel much more comfortable, more likely to succeed and have higher job and customer satisfaction. The staff were given direction (path) and could see the rewards or goals, the leader helps facilitate this transition.
Mcfarlane changed his leadership style, to give staff more involvement by conducting staff surveys, then implementing change due to results of the survey, this is further evidence to using path-goal theory. As the path goal leadership style assumes that leaders are flexible and can change their behaviours (Robbins, et al, pg 587, 2006). This is contrast to another leadership style, Fielders contingency model, which suggests that leaders could not change their behavior. If using this theory it would been very difficult for ANZ to change its culture as the leader would be unwilling to change their own behaviour in order to facilitate the required changes to result in the change in culture.
Question 4) Discuss the challenges faced by McFarlane and his executive team in introducing change across ANZ.
For change to occur, someone must take responsibility for managing the change process, the person who does this, who is also usually a manager, is known as a change agent (Robbins and Coulter, pg 360, 2007). At ANZ their CEO McFarlane is the change agent, and he may have encountered significant resistance change.
There are numerous reasons why people within organisations resist change. Kreitner & Kiniki pg 546 – 547, 2008 explain that individual and group behaviour following organizational change can take many forms, from extreme ranges of acceptance to active resistance. This resistance to change is an emotional /behavioural response to real or imagined threats to an established work routine. One particular reason discussed by Kreitner & Kiniki, 2008 is an individuals predisposition to change, which is highly personal and deeply ingrained. With so many employees at the ANZ there is a strong chance that there would have been quite a lot of people who just resist change for personal reasons.
Another reason for resistance to change is due to a climate of mistrust (Kreitner & Kiniki pg 547, 2008). This may have been the biggest resistance to change within the ANZ. Prior to the change employee morale was low, employees perceptions of ANZ were that they did not care about their staff and were more concerned with profits, cost reduction etc. ANZ were aware of their employees feelings, the lack of trust and realized the importance of having employees trust. Therefore when ANZ were initiating change staff may have found it difficult to adjust and believe that the change was going to be a change for the good.
Question 5) Discuss whether or not the executive management instigated changes to the culture of the ANZ are ethical.
Ethical behaviour is described as ‘behaviour that conforms to generally accepted social norms’ (Davidson & Griffen, pg 106, 2003). The workplace info case study mentions that most banks in the late 1990’s had a poor public image due to bank fees, branch closures etc. Although it is common practice amongst banks to operate under the conditions, .it is not considered acceptable behavior by the wider community, namely its customers.
The ANZ bank wanted to be different to the other banks, it wanted its culture to be a point of difference from the others. It could be said that the ANZ felt it had a responsibility to change peoples perceptions of itself and banks in general. Davidson & Griffen, pg 117, 2003 explain that ‘ethics relate to individuals. Organisations themselves do not have ethics, but organisations do relate to their environment in ways that often involve ethical dilemmas and decisions. Social responsibility is the set of obligations an organisation has to protect and enhance the society in which it functions’. The society for the ANZ bank is the banking community, general community (customers) and its staff.
The ANZ bank felt it had responsibilities to their customers, by providing a higher level of customer service in order to enhance its public image, but it had a responsibility to its staff, as they are the people who are to implement the changes. The ANZ may have avoided an ethical issue when it decided that its staff could choose where it could spend time volunteering. ANZ originally controlled where staff would go to volunteer, but this was quickly changed, possibly as a result to ethical dilemmas that may have arose.
While there may have been some resistance by staff to change, it did occur and its staff and customer satisfaction have increased, without any major ethical dilemmas arising.
Question 6) Determine the organisational structure that would best facilitate the implementation of these new practices.
Organisational structure is the formal arrangement of jobs within an organisation. When managers develop change or structure, they’re engaged in organisational design, which involves 6 key elements (Robbins and Coulter, pg 266, 2007). Therefore to develop an organisational structure the manager must consider the elements of organisational design.
One of these elements that would have been used by ANZ would have been p of control, which would then also lead to either having a tall or flat organisation structure. Span of control is determining how many people will report to each supervisor or manager (Davidson & Griffen, pg 357, 2003). The decision about p of control determines the overall structure of the organistaion, which will be either a flat or tall organization (Davidson & Griffen, pg 358, 2003).
The ANZ may have shifted from a tall organizational structure to a flat structure. Davidson & Griffen, pg 106, 2003 explain that many experts agree that business run more effectively with fewer layers of organisations, which depicts a flat organisational structure. Flat organisations often lead to increased staff morale, productivity as well as increased managerial responsibility (Davidson & Griffen, pg 358, 2003). ANZ structure may look like a tall organization due to the large number of employees, braches and therefore managers for each branch, however a change occurred which would have resulted in less layers, which increased communication from employees to management which assisted in the culture change at ANZ.
Question 7) Explain the importance of informal groups in achieving the managerial objective of cultural change.
Groups are defined as ‘two or more interacting and interdependent individuals who come together to achieve specific goals’ (Robbins and Coulter, pg 424, 2007). For example, an ANZ branch might have a customer service team, who get together regularly to discuss new ways to increase customer satisfaction. The members in this group are from same ‘team’, and perhaps if not for working within close proximity of each other would not socialise, they are organised formal groups.
Contrast to this is informal groups, which Davidson and Griffen, pg 645, 2003, descibe as ‘A group created by its members for purposes that may or may not be relevant to the organisation’s goals’. Informal groups may form while standing around in the morning making coffee, some informal groups are formed by an interpersonal attraction (Davidson and Griffen, pg 646, 2003).
Whatever the reason informal groups are formed, they will be important in assisting in the shift for cultural change. When informal groups are formed, they are likely to become cohesive groups, Davidson and Griffen, pg 653, 2003, explain cohesiveness as ‘the extent to which members are loyal and committed to a group; the degree of mutual attractiveness in the group’. Therefore if informal groups within an organisation are open to change it is more likely that the organisation will be able to achieve its objectives, and it this case that is assist with a cultural change.
The ANZ bank appears to have undergone a successful cultural transformation, with a focus of staff morale, which increased customer satisfaction. This change has been so well received by staff it now embedded in its staff, and will become the norm for all future staff, regardless of their personality or who is managing them.