• Define ‘organizational development’ in the context of change in organizations
• Appreciate what is meant by ‘organizational learning’ and how it can help create sustainable change in organizations
• Identify the key factors for developing a learning organization

• Organizational Development (OD) is the process for initiating, implementing and sustaining change, through the facilitation of individual, team and organizational interventions.
• Dialogic OD methods, such as Appreciative Inquiry, Open Space Technology, and Knowledge or World Café, have developed in response to criticisms of the traditional OD approaches.
• An organization can proactively sustain change by making continuous learning part of its culture, by becoming an organization that learns – a learning organization.
• When change does go wrong it is important to evaluate what happened. The important point about change and transformations that fail is that managers and leaders take the time to learn from them and ensure that the learning is shared with relevant stakeholders.

• In groups discuss the types of interventions which have been introduced either in the organization in which you work or an organization with which you are familiar. Then identify which interventions were the most successful and why.

BankCo is one of Europe’s leading financial services groups. In addition to providing a wide range of banking services, the BankCo Group includes other organizations which are well known in the financial and insurance services sector and which have been acquired within the last five years. BankCo is number one in Europe for small business customers, private banking and asset finance. In addition to Europe, the Group has offices in the US and Asia and employs nearly 100,000 staff.

BankCo invests heavily in the development of their employees. Everyone is encouraged to take responsibility for their own development. Personal Development Planning is an important element of their performance management system.

Organizational changes

In the past few months BankCo has begun to change its hierarchical structure to one that resembles more of a networked organization held together by a number of familiar brands. Management has invested heavily in technology, including an intranet site order to manage all parts of its network effectively and to ensure communication links across the Group.

The following changes have recently been introduced:

• A corporate mission ‘to become no. 1 Bank for customer satisfaction’. Along with revised strategic priorities which include:

o   to deliver superior sustainable value by running our business with integrity and openness, delivering optimum financial results within clearly defined business principles;

o   financial inclusion and capability;

o   protecting our customers and shareholders against crime and fraud;

o   managing our people to a global benchmark;

o   investing heavily in the communities in which we serve around the world through our charitable engagement and through supporting the causes our staff care about.

• These have been well publicized throughout the organization, using a variety of methods including road shows, workshops and cascaded team briefings.
• New HR and development policies have been communicated in similar ways. Senior management is committed to ensuring that at every stage of the change process there is full consultation and that appropriate relations, reward and resourcing policies are put in place.
• The Group has recently opened its own corporate university at its headquarters and is developing links to business schools to provide leadership development programmes.
• The organization has, in the past six months, opened a number of high street ‘Café Banks’ in a joint venture with a chain of coffee shops.
• The credit card side of the operations and its customer relations are now managed, in a joint venture, by an international credit card organization.

Future changes

During the next three months further changes will be introduced on a pilot basis. The most important of these are:

• One third of the company’s branches will become pilot franchises, in which local managers can purchase a 25% stake in the branch.
• All operators in the call centres will be required to take more responsibility. Their role will change from one where they take an enquiry and pass it on to someone with the expert knowledge to reply to it, to one where they will have to answer the enquiry themselves.

Written by Julie Hodges

This case study focuses upon AEGON Asset Management, part of the AEGON Group, one of the world’s largest life insurance and pensions companies. AEGON owns pensions, life insurance, asset management and adviser businesses. AEGON Asset Management had historically been successful, but compared to its competitors it was not well known by consumers. It had developed good products and services and had a good reputation. However, it was not as well recognized in areas other than pensions. Often these other areas, such as offshore investment products, were more profitable. Its brand profile was limited in the marketplace.

With the arrival of a new Chief Executive (CEO) in place, the decision was taking to review the brand and its value. The purpose of this was to address the following key questions:

• What do did the company stand for?
• What did they want to stand for?
• What should they be doing about it?

The CEO’s goal was to provide a vision for change. Financial objectives were important as the path for future developments depended upon these. It was also important to create more clarity about who AEGON Asset Management was. With limited awareness of the company in the UK, it was important to explain what it had to offer, how big the organization was and how strong it was globally. At the heart of this strategy was the need to:

• Simplify financial services and provide more customer focus. It was important that consumers understood more precisely what they were buying, as well as the benefits and services they received.
• Develop the workforce. The objective was to develop the skills needed within the business to help it change.
• Create a more distinct presence within the marketplace. This involved refreshing the company brand in a way that made it more distinctive from its competitors and more attractive to customers.

In order to help embed this change the need was identified to develop a capability framework to support the brand values and to influence how people at all levels within the organization should work and make decisions. The capabilities were identified by using critical incident techniques. The eight capabilities were:

• Think customer
• Embrace change
• Encourage excellence
• Act with integrity
• Decisive action
• Work together
• Learn and grow
• Relate and communicate

The changes affected the organization both internally and externally. Within the organization, they influenced not only how people behaved but also how they communicated. The organization became more focused on the customer. The emphasis was on making information clearer for the customer to understand and the company easier to do business with. To help embed the capabilities, a series of workshops were run for staff across the organization, outlining the new capabilities and enabling staff to identify for themselves how they would demonstrate them.

Corus manufactures processes and distributes steel and aluminium products and services to customers worldwide. Corus is a subsidiary of Tata Steel and is Europe’s second-largest steel producer with annual revenues of over £11 billion and a crude-steel production of about 20 million tonnes. It employs around 41,000 people worldwide. This case is about how the company embarked on an extensive process of change management to enable the company to gain a competitive advantage in a fast moving marketplace.

Corus was seeking to create high-performance teams within its business units in order to improve performance and particularly to build stronger relationships with customers. While it was pursuing this strategy it was faced with an external environment which contains many hostile factors, such as fluctuations in the currency market. One of the drivers was to create partnerships with customers and suppliers that change the market or transform the interface with customers. A key change that took place to achieve this was in the company’s structure of sales accounts teams. Previously Corus operated with product-based sales teams operating from four different geographical locations. It had to move from a situation in which there was a hierarchical structure in which many of the sales staff expected to be told what to do. Managing change involved a process of moving staff away from their comfort zones of behaving in a certain way – ‘If you do what you have always done, you’ll get what you always got’ – to developing new ways of working in which the new account managers had considerable responsibility, for example to sign off deals and to negotiate contracts.

An important aspect of the change was that of relocating employees to other sites. The staff needed to be retrained in new areas so that they could work with new products and new systems. Not everyone was prepared to make the move or to make the change in the way they worked. Corus therefore had to engage in a drive to fill the gaps by interviewing to fill vacancies. It was then necessary to engage in an extensive training programme so that everyone involved with the new way of working was familiar with new approaches and with how their new roles differed from previous roles. Training programmes were implemented, although it took a long time for the real impact of the change to be felt. The training programmes involved familiarizing people with a range of products that were new to them, new markets and new ways of dealing with people.

One of the major difficulties faced in the early days of introducing the change was the sheer volume of learning that needed to take place, as individuals had to take on board a lot of new information and ways of working. Another difficulty was that, while the objective was to get account managers to create account development plans, talk to customers and develop an awareness of their customers’ strategies, they were often unable to do this until the nitty-gritty operational activities, such as handling enquiries and entering orders, had been effectively carried out. Another barrier to change was that of ‘invisible walls’ that existed between people within the unit. A key part of the process of change was therefore to develop a teamwork approach so that everyone in the business unit could start to work as a high performance team member. In addition common systems needed to be established to create a consistency of approach so that for example there would be standardized approaches to handling orders and dealing with complaints from customers.

The change process at Corus was not easy, both on account of the extensive changes taking place in the business environment and because of the sheer scale of the changes required. People used to working in specific product areas and in specific locations needed to change their mindsets to realize that they were working in a single business unit producing a variety of products for the benefit of the customer. They needed to take shared responsibility for these products and for the success of the business unit.

·         Critically assess the Organizational Development (OD) approach to change interventions.