Aegon Group International: Change Management Strategies

Aegon Group International: Change Management Strategies INTRODUCTION TO THE CHOOSEN ORGANIZATION: AEGON Group (AEGON N.V.), an international provider of life insurance, pensions and other long-term investment products. Based in The Hague, the Netherlands, AEGON has around 40 million policyholders and approximately 28,000 employees around the world. It has assets, including all revenue-generating investments, of à ¢Ã¢â‚¬Å¡Ã‚ ¬405 billion ( £348 billion).* AEGONs mission is to help customers secure their long-term financial futures. AEGON has three main established markets: the United States, the Netherlands and the United Kingdom. Recently, AEGON has expanded its international presence, pushing into new growth markets in the Americas, Asia and Central and Eastern Europe. At present, AEGON has businesses in more than 20 markets across the globe. AEGON has a clear, well-defined strategy, aimed at creating long-term value for all the companys stakeholders. Committed to its core businesses (life insurance and pensions), AEGON seeks profitable, sustainable growth and pursues a multi-channel approach to distribution to give customers access to products and services in the way that best suits them. AEGON was created in 1983 the result of a merger between two Dutch insurance companies AGO and Ennia. And many of the companies who form AEGON have a long history. For example, in the United States, Monumental Life based in Baltimore has been insuring people since 1858, while in the United Kingdom, AEGON (a brand name of Scottish Equitable plc) has been in existence since the early 1830s. *Source: AEGON N.V. quarterly results, 30 September 2010 TASK 1; EXPLORE THE BACKGROUND TO CHANGE AFFECTING THE ORGANIZATION. (A) IDENTIFY A RANGE OF MODELS OF CHANGE MANAGEMENT AND EXPLAIN THE ANY THREE OF THESE MODELS IN DETAIL. McKINSEY 7-S MODEL: The McKinsey 7-S Model was created by Tom Peters and Robert Waterman whilst they were working for McKinsey Company in 1978 (12Manager, 2007. According to this model there are seven different factors that are a part of the model: Shared values Strategy Structure Systems Style Staff Skills Shared values are the centre of the model because it is what the organization believes in and stands for, such as the mission of the company. Strategy represents what the company plans to do react to any changes of its external surroundings (Recklies, 2007). The structure refers to the organizational structure of the company. Systems are the portion of the model that represents the procedures, processes and routines that characterize how the work should be done. Staff is quite obvious in the fact that it is a proper representation of who is employed by the organization and what they do within the organization (12Manage, 2007). Style signifies the organizational culture and management styles that are utilized within the organization (12Manage, 2007). Skills indicate the abilities and competencies of either the employees or the organization holistically. LEWINNS CHANGE MANAGEMENT MODEL: This model was developed in early 1950s by Kurt Lewin a psychologiest. Lewin recognized following three stages of change (Syque, 2007), Unfreeze Ttransition Refreeze The majority of people tends to stay within certain safe zones and is hesitant of change (Syque, 2007). These people tend to become comfortable in this unchanging environment and become uncomfortable when any change occurs, even if it is a minor one. In order to overcome this frozen state, we must initiate an unfreeze period, which is done through motivation (Mind Tools, 2007). Motivation is important in any organization, even when it is not changing. The transition period is when the change is occurring, which is a voyage and not a step.. The transition period takes time because people do not like change. At the end of the transitional voyage, comes the next stage: refreeze. This is the stage where the company once again becomes stable. Kotters Eight Step Change Model; According to this model there are eight steps that must be followed for successful change. Step One: Increase urgency for change Step Two: Build a team for the change Step Three: Construct the vision Step Four: Communicate Step Five: Empower Step Six: Create short term goals Step Seven: Be persistent Step Eight: Make the change permanent The first step is to create urgency for change. This means that we have to convince the employees that this change is necessary for the company to survive. This also means that we must communicate that the change is achievable without any detrimental effects on their jobs. The next step is to build a team for the change, which has to be of some respected employees within the company. The third step is to construct the vision, which will show clear direction to how the change will better the future of the company and their jobs (Rose, 2002). The fourth step is to communicate this vision. In order for the vision to work it must be fully understand by the employees, which means that it is necessary for the leaders of the change group to follow this vision. The fifth step it to empower the employees to execute the change. It is still important that the management follow the same guidelines as the employees are too. By creating short term goals, we assist the employees to accept the chang e by showing them progress. Rewards are very important at this step also. The seventh step is about persistence because we should influence more change even after the short term goals are met or the original plan for change will cease and die (Rose, 2002). The final step is to make the change permanent by moving fitting it into the companys culture and practices, such as promotion (Chapman, 2006). (B) IDENTIFY AND LIST THE FACTORS THAT ARE DRIVING YOUR CHOSEN ORGANIZATION TO CHANGE, AND SUGGEST AN APPROPRIATE MODEL OF CHANGE FOR YOUR CHOSEN ORGANIZAITON WITH REASONS FOR SUGGESTING THE MODEL. In case of AEGON UK following are the deriving forces for organizational change. Financial restructuring in the United Kingdom. Growth in population and changes in demographic attributes. Cultural diversification in the UK. Changes in social dimensions of the United Kingdom. Evolution of political orientation and policies. Increase in the domestic purchasing power. Institutional and policies neglect regarding the financial products. High competitiveness and consequent challenges. Deficient Management practices. Inefficiency in processes. In the personal opinion of the researcher the best choice of change model that should be applicable in case of AEGON UK is Kotters Eight Step Change Model. The researcher believes this is the best choice because it is simple mode. Researcher thinks in this way because it fully prepares the employees of the company before the vision is even created, which means that the actual transition will be much easier in the long run. There are fewer disadvantages to this model than others. Overall it is the best fit for most companies because substantial change is needed for the divisions because its history. This will also help ease the transition because the division has quite a history compared to the rest of the company, so people are not as set in the ways, as they would be if the division had been around longer. (C) IDENTIFY THE VALUE OF STRATEGIC INTERVENTION TECHNIQUES AND WHAT INTERVENTION TECHNIQUES WOULD YOU APPLY IN INTRODUCING CHANGE INTO YOUR CHOSEN ORGANIZATION; There is no question that some form of strategic planning is key to an organizations future performance. However, there are several challenges to implementing this type of planning in an organization. Large group interventions are one set of methods for addressing these challenges. In case of AEGON UK strategic planning implies planning for the long-term. The time frame associated with this type of planning is from three to five years into the future. Due to this timeframe, there are several challenges associated with long-range planning. These include: creating a plan that is breakthrough in its orientation rather than more of the same, getting all stakeholders to commit to the organizations strategies and to follow through on implementation of critical activities, and decreasing cycle time in the planning process. In todays world, organizations cannot afford these challenges. To survive, they must be able to quickly create, deploy, and implement breakthrough strategies that help them to continually anticipate and meet current and future customer requirements. In doing so, they must be able to align all internal and external resources around the plan. This sort of orientation necessitates approaches to strategic planning that involve all employees and stakeholders in the planning process and a planning process that can occur within a shortened time frame. The researcher will prefer to adopt Large Group Interventions Technique to address the proposed change in the chosen organization AEGON. LARGE GROUP INTERVENTIONS: Over the past 20 years, a number of large group intervention techniques have emerged that more quickly effect large-scale change. As such, they have been effective tools in dealing with some of the issues associated with strategic planning. These intervention techniques include: Design, Participative Design, Simu-Real, Work-outs, and Open Space Technology. As summarized in the book, Large Group Interventions, by Barbara Benedict Bunker and Billie Alban, these approaches allow organizations to involve anywhere from 30 to hundreds, if not a few thousand, individuals in working together to accomplish a common outcome. They may come together for a single day or multiple days or events. In the process of working collaboratively, the organization can more quickly achieve what Kathleen Dannemiller has coined one heart and one mind-a key factor in organizational alignment. These approaches have several defining characteristics. They are best used when: Time is of the essence. The issue is complex. The purpose of the intervention is clear. There is committed and involved leadership. Benefits can be reaped from stakeholder involvement and ownership. A design team that is representative of the whole is engaged to develop the content and process pieces of the intervention as well as its follow-up, support, and communications plan. Real work occurs during the event. Large group interventions have been used successfully in diverse industries hence the researcher believes this type of strategic intervention technique will be effective for AEGON UK. TASK 2 UNDERSTAND ISSUSES RELATING TO STRATEGIC CHANGE IN THE ORGANIZATION (A) DISCUSS THE GENERIC BACKGROUND TO CHANGE THAT EXISTS IN TODAYS ECONOMY, AND THE SPECIFIC DRIVES THAT MOTIVATED YOUR CHOSEN ORGANIZATION TO CONSIDER CHANGE. World appears to be integrating economically, politically and culturally. Irrespective of the national boundaries huge developments in information, communication and technology has taken place. Ownership patters of corporate sector all over the world have become more complex like joint ventures, cross-border acquisitions etc. Global strategies have emerged in the production of goods and services, distribution and management of labour. These have had an immense impact on business activities. The world economy is now more closely interlinked and the finance has become a global resource. In the current economic circumstances organizations are facing both external and internal forces that ultimately make change unavoidable. External forces such as new work force demographics; changing expectations about quality, productivity, and customer satisfaction; and new technologies are dramatically affecting the operating environment in organizations globe wise. Internally, financial limitations, the condition to do more with less, cross-functional groups, mergers and acquisitions and empowered employees all influences organizations position to compete in the global marketplace. Outsourcing, automation, best practices, downsizing, globalization, repositioning, re-engineering, and all other such terms refer towards change to your work force. It does not matter how do you define this change the fact is that challenge to the organization is inevitable; balancing the demands and hopes among the stakeholders including customer, employees, management and shareholders. Without balance, an organization risks an anxious work force that may yield declining output. The magnitude of the success of the organization depends how an organization decides to motive, correspond and incorporate change into the work force. So we can say that change is a process not an event. In the corporate world, when any or all of the factors such as; environment, technology, task, structure or people are altered fully or partially, the phenomenon is called as change. Whenever in the corporate environment deriving forces and restraining forces are not in equilibrium, there is a need for the change. In case of the AEGON UK there were many deriving forces that caused the background of change in AEGON UK. AEGON UK was although was bearing international repute but still it didnt had band awareness by the name of AEGON in the United Kingdom. The philosophy of the financial services products that were being sold by AEGON UK or its competitors were quite difficult to understand by the potential customers. Life expectancy in the United Kingdom has increased in the recent years so people can expect to be retired for longer age and similarly many individual never think it worthy to plan about their retirement properly, on the other hand there was a derive from the government to reduce dependency on the state in old age so there was a need to make a social awareness among the people for the benefits of having the financial products sold by the AEGON UK to secure there future because benefit of these investments usually realised in later years. AEGON was not well recognised in the areas ot her than pensions. Above stated reasons are the few of those that lead management to introduce change in the corporate structure and strategy of the AEGON UK Limited. (B) CONSIDER THE IMPLICAITONS IN TERMS OF RESOURCES, FOR YOUR CHOSEN ORGANIZATION IF IT FAILED TO RESPOND TO THE NEED FOR STRATEGIC CHANGE. Human and other Capacity Requirements The human capacity and skills required to implement the strategy, current and potential sources of these resources. Also, other capacity needs required such as internal systems, management structures, engaged partners and Network NOs and POs, and a supportive legal framework etc. Financial Requirements The funding required implementing the proposed management strategy, current and potential sources of these funds, and the most critical resource and funding gaps. Risk Assessment and Mitigation Strategy What risks exist and how they can be addressed. Estimate of Project Lifespan, Sustainability, and Exit Strategy How long the strategy will stand implemented, after how long and why strategy will require modifications (if feasible to do so), and how it will ensure sustainability of the corporate objective achievements. Strategic Change Management Plan may only be considered complete when these components have been defined, at least in broad terms. As the project moves into change implementation, several of these components are then defined in more detail and tested in reality. TASK 3 DEVELOP SYSTEMS FOR UNDERSTANDING AND INVOLVING OTHERS IN THE PROCESS OF CHANGE (A) IDENTIFY THE KEY STAKEHOLDERS IN YOUR CHOSEN ORGANIZATION AND PROPOSE SYSTEMS TO INVOLVE THOSE STAKEHOLDERS IN THE PLANNING OF CHANGE. Stake holders are the people who are directly affected by the decisions of an entity. Stake holder may be internal (management, employees etc.) or external (government, suppliers, banks, media, shareholders etc). Different stake holders have different expectations from the organization. In the process of change, stake holders can be involved in a number of ways suck as; Involve them in problem solving. Keep them up to date of standing towards corporate objectives? Take actions on feedback received by them? Mobilize the correct resources at the right moment to recognize the implementation plan? In order to involve the stake holders to the process of change the new chief executive officer of AEGON carried out the following actions; Simplification of Financial Services; for the purpose of involving the customers to the process of change the Chief Executive Officer of AEGON adopted a customer focused approach. The CEO simplified the ever complex financial services in terms of their understanding and it was now made very simple to understand. Now the customers know that what they are investing into and what return their investment is expected to yield at the end of the contract. Earlier customers have always been confused between the complex calculations. Now the customers are happy because they dont need any financial interpreter to understand the ins and outs of the products offered by the AEGON. Workforce Development; An-other very important stake holder of the organization is the employees. These are actually the people who are practically responsible for to make the change process successful or not. Before implementing the change the new CEO took the employees in confidence and brief them about the fact that what AEGON stands today and what AEGON wants to stand in the future and he also address the forces reasoning this change. Next step is to develop the new skilled required to implement the change, the CEO introduced job rotation which involves progression from one job to the other job. Hence it provided individual employees with a coherent career path. CEO also arranged a Management Development Programme in collaboration with a leading management college for the training of the workforce. Creating Distinct Market Place; To refresh the brand identity of AEGON into the minds of the people the CEO carried out an external promotional campaign to highlight the relationship between the locally famous Scottish Equitable and AEGON. Also the CEO spoke to the media stating the reasons for the change and how the change will be useful for the stakeholders. (B) ANALYSE AND EVALUATE THE ADVANTAGES AND DISADVANTAGES OF THESE SYSTEMS. The systems stated above in part (A) were used to involve the different people into the process of change. The need for this change was actually those external and internal forces that were affecting the performance of the AEGON. The AEGON business was not going well due to a number of key issues. Due to those issues the Chief Executive Officer had to bring some changes into the line of operation and the way of operations by AEGON. The Chief Executive Officer related this change programme being fully customer focused and associated this whole change project with certain behaviours which are; think customer; embrace change, encourage excellence, act with integrity, decisive action, work together, learn and grow relate and communicate. The employees were trained about these behaviours by a leading management institute. Another reason for this system of change relating to the problem that AEGON was facing was that the consumers were not aware about the products and services provided by AEGON. The customers had always been confused about understanding their investment policy. They had never been able to make comparison among the services provided by AEGON neither about the possible outcome if they invest into them. As to the reaction of the fact the Chief Executive Officer simplified the description of the product to the extent that every person could understand and calculate the financial flows regarding the products offered by AEGON. This strategy really worked and AEGON have a very positive response from its customers. The other system that the Chief Executive Officer developed was to train the workforce. First the employees were addressed about the need for the change and the possible proposed changes and before implementing the change it is very essential that the workforce is capable enough to perform their duties into the new environment. For the purpose workforce was developed with rotating job descriptions and Management Development Programme was conducted by a leading management college to train the employees about how to respond to the change. Finally the Chief Executive Officer had to respond to the most vital reason for the change that is the fact that AEGON was trading under many different trade names into the same geographical location. This was the greatest reason because of which AEGON had not taken a distinct market place despite of such a historical background and multinational presence. The CEO for the purpose spoke to the media and addressed the whole situation, besides that many others measures were taken to establish a brand position, for instance Scottish Equitable was changed to AEGON Scottish-Equitable representing the repute of the local company and the brand of AEGON similarly external promotional campaign was incorporated into the system. (C) EXPLAIN HOW WOULD YOU DEVELOP A CHANGE MANAGEMENT STRATEGY WITH THE KEY STAKEHOLDERS. Stakeholder management is critical to the success of introducing change in the organization .The more people are being affected by change, the more likely it is that your actions will impact people who have power and influence over your projects. These people could be strong supporters of your work or they could block it. Stakeholder Management Strategy is an important discipline that successful people use to win support from others. It helps them ensure that their projects succeed where others fail. Stakeholder Analysis is the technique used to identify the key people who have to be won over. You then use Stakeholder Planning to build the support that helps you succeed. The benefits of using a stakeholder-based approach are that: The opinions of the most powerful stakeholders to shape change implementation at an early stage. Not only does this make it more likely that they will support you, their input can also improve the quality of your project Gaining support from powerful stakeholders can help you to win more resources this makes it more likely that your projects will be successful By communicating with stakeholders early and frequently, you can ensure that they fully understand what you are doing and understand the benefits of your project this means they can support you actively when necessary By anticipating what peoples reaction to your project may be, and build into your plan the actions that will win peoples support. (D) WHAT WOULD BE YOUR STRATEGY FOR MANAGING RESISTANCE TO CHANGE IN THIS ORGANIZATION? The researcher has developed following strategy for managing resistance to change in the AEGON. There will be a workflow process in order to achieve results for mutual benefits for employees and organization. There will be an Authority Process in order to direct behaviour in the interests of the organization and its participants. There would be a Reward and Penalty Process to induce people to behave in a way required by the interests of the organization and its participants and / or to behave in a way making associated activity possible. There will be a Perpetuation Process to maintain, replenish, and make adequate the quantity and quality of social and natural resources utilized by the organization and its participants. There must be an Identification Process to develop a concept of the wholeness, uniqueness and significance of the organization. This is usually accompanied by efforts to select and define clearly understood emotionally toned symbols, concepts, or other such factors which will help individual participants identify the uniqueness of the organization as a whole, which in turn automatically helps to define the uniqueness of the organization in the larger environment in which it is embedded. There will be a communication process to provide for the exchange of information, ideas, feelings and values etc utilized in all activities to the stake holders. There must be an evaluation process which establishes criteria for and defines levels of utility and value for people, materials, ideas, and activities and which rates them and allocates them to these levels. TASK 4 PLAN TO IMPLEMENT MODELS FOR ENSURING ONGOING CHANGE (A) IDENTIFY APPROPRIATE MODELS FOR IMPLEMENTING CHANGE THAT SUITE YOUR CHOSEN ORGANIZAITON. Model for change refers towards the overall strategy to incorporate change into the organizational environment. A model of change is usually implemented into the following steps; Access the necessity of change Forming a powerful alliance Creating an idea for change Communicate the vision Remove barriers Incorporate the change into organization The Chief Executive Officer implemented the same model to incorporate change into the organization. The CEO realised the need for the changed and he came to know that company is not doing well as compared to its competitors, the legislative restriction of price has decreased the profitability lack of brand awareness getting worst and difficulty of the customers understanding the soul of the services offered by the AEGON were the factors that required an immediate change into the organization at a large scale. It was what AEGON was at the moment. The CEO conducted a SWOT analysis of the firm. After getting the situation the CEO decided to develop a new behavioural framework for the staff which was known as 8 behaviours framework and also arranged managerial training for the workforce. The CEO further addressed to the stakeholders of the organization to communicate his vision to them by simplifying the financial services, developing a workforce and arranging a brand awareness campaign. The CEO also spoke to the media about this change process and the reasons for the change. Hence model implemented by the CEO of AEGON UK brought about considerable positive change to the organization and gave it a new line of direction towards the desired goals and objectives. (B) HOW WOULD YOU IMPLEMENT THIS MODEL IN CHOSEN ORGANIZATION WHAT IMPROVEMENTS DO YOU EXPECT TO ACHIEVE BY IMPLEMENTING YOUR CHOSEN MODEL AND HOW WOULD YOU MEASURE THESE? The plan for the change was implemented into the various steps such as discovery phase to analyze where the AEGON is right now, where it wants to be and what actions are required to meet the objectives set by the Chief Executive Officer to become the best long term saving and protection business into the United Kingdom. Discovery phase revealed the reasons for changes and weaknesses and strengths of the organization. After the discovery phase the next step was to involve the appropriate stake holders into the process of change. The chief executive officer involved various stakeholders in different effective manner as discussed previously. The CEO further redeveloped the organizational behavioural framework and arranged the training of the staff members. The outcomes of the efforts made by the CEO were extremely encouraging and rewarding for the company. Before the change there was confusion among the people about the recognition of AEGON but after the heavy promotion of the brand AEGON with Scottish-Equitable created a more reliable image of the AEGON into the minds of the people. Further to that the brand carried a new more powerful and prestigious look as AEGON Scottish-Equitable. The behaviour of the employees changed altogether, now they behave with more customer focused approach. Now the employees are concern to provide useful and relevant services to their existing and potential customers and the organization is always doing its level best to do what is really important to their customers. By the change into the structure of AEGON now the customers are being offered more choices of services. AEGON launched new and ground-breaking products like the 5 for Life annuity has facilitated to change the way in which consumers can look at their retirement income. AEGON providing the levels of return promised and being responsible for any risks associated with doing so it provides more certainty about levels of income for the consumer. In short as the result of the change implement by the CEO of AEGON the company rebuilt its brand reputation, became more customer focused, started to provide more innovative products and became more popular among the consumers and ultimately the business has grown to a gigantic extent. In order to become more customers focused the new Chief Executive Officer decided to develop a new organizational behaviour framework to support the brand values of AEGON. Behavioural framework is the structured pre-defined codes of behaviour how the individuals working within the organization are suppose to behave among themselves and to the people outside the organization. Presence of the behavioural framework gives rise to the similar behavioural and ethical values of all the individuals at all levels with in the organizational. Behavioural framework developed by the AEGON was mainly focusing 8 behavioural values which are; THINK CUSTOMER; EMBRACE CHANGE; ENCOURAGE EXCELLENCE; ACT WITH INTEGRITY; DECISIVE ACTIONS; WORK TOGETHER; LEARN GROW; RELATE COMMUNICATE As the part of their strategy AEGON also undertook an audit to look at the two aspects which were the internal position of the company and how AEGON was positioned internally into the market respectively. The audit revealed that AEGON was firmly positioned within the market. Its workforce was known for their considerable expertise, innovation and clarity of communication. The external audit also helped to determine where AEGON was placed in relation to its competitors. This audit provided a very important vision to the decisions that were needed to initiate the change process.