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Table of Contents

Organizational Change Plan for Cowboy Bank Inc. - Part 8


Section 4: Consolidation

This section deals with issues that support or threaten the implementation of the plan. It will identify the risks involved in implementing the plan, outline the ethical issues that need to be considered and outlines how the whole program will be evaluated and communicated to all stakeholders.

4.1 Risks in Implementation

There is always a chance that implementing a change plan will result in disastrous outcomes. Identifying these risks is the first step to mitigating them (Forti, 2012). For any business, risks are always a threat to stability. Situations influence the risk level. Certain situations have the least risk levels as almost all possibilities are accounted for. Uncertain situations, however, have the highest level of risk. Unfortunately for Cowboy bank, a change program is suitable for high levels of risk. These risks can affect all stakeholders in the organization. It is, therefore, paramount that they are identified and mitigated against.

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The main risk areas surrounding the implementation of the change program are:

  1. Customer related risks
  2. Financial risks
  3. Reputation risks and
  4. Legal risks

While elaborating the structure of this implementation plan, it does not consider the possible effects changes might have on the customers. This is mainly because it is meant to focus on the personnel rather than the customers. It would, however, be irresponsible to fail to identify possible effects on the customer (Pettigrew, Woodman & Cameron, 2001). The leadership team can then take action on mitigating the risks involved. Cowboy bank wants to institute radical changes. Closure of more than 200 branches in Texas is one of them. Having served farms in the state for over 80 years, customers have been used to the bank being in many locations. Some probably favor the bank due to this fact. Closing the branches, might confuse the customers. Most institutions close their branches as a result of bankruptcy. This has been observed on numerous occasions. Therefore, there is a risk that customers will think that the bank is going bankrupt. This can have an adverse effect on the bank’s current market. It could lead to the market share shrinking as competitors move in to the areas where the bank had controlled. Speculating customers might decide to move to other banks. If Cowboy loses customers at such a high rate, it might actually go bankrupt.

Another effect on customer would be loan repayment. The current network of over 200 branches allows the bank to collect the principle plus interest. Closure of a majority of these branches might increase the number of people not paying their loans. For a company that depends on the interest they charge, an increased level of the default might threaten its financial security.

There are many financial risks that accompany the implementation of this plan. The organization has to invest millions for the restructure. The more the number of changes to be made the higher the amount of money to be invested. Even though the leadership team has evaluated the appropriateness of the organizational change, there is still substantial financial risk affecting the organization. The rate of return on investment is one. The bank might invest in the change program and then fail to recoup the moneys invested. Plans rarely come through as structured. Therefore, the plan might take a longer time to implement than anticipated. The longer it takes, the higher the amounts spent for the program. Prolonged project time might also impact on the work flow of the organization. Interruptions during the transition period are expected. Therefore, if this period is prolonged, there will be a lot of interruptions to the work flow and eventually on the workload. Work flow problems are undesirable as they often repel customers. Hence, execution of the change program might cause financial problems in the organization.

The reputation of a bank is vital to its success. Reputation is usually hinged on the quality of service and period it has been in existence (Kanter, 2003). Cowboy bank has built a reputation in the state. Customers prefer it for certain attributes. Some customers are loyal to it because it has served them well over the years. Reputation risk is a real threat for the company if it executes the change program. Changes in the approach to customers might irritate some of the loyal customers. Sales people are often seen as a bother. They are aggressive and at times influence people to buy items they cannot afford.

Therefore, while an aggressive approach might result in higher sales, it might compromise Cowboy’s reputation. Reputation is essential for the long run. Therefore, maintaining or building one should boost business. The leadership team should take into account reputation while devising a public sensitization plan. A public sensitization plan will allow the company to convince the customers that their reputation will not change and that the changes being made are for the good of the customer.

Legal risks also exist in implementation of the plan. As mentioned in section two, employees might take legal action against the bank for the changes being made. There are other stakeholders who are also likely to take the bank to court over the changes being made. For instance, if the company terminates a supplier to the over 200 branches, he or she could sue the bank for breach of contract. The company could also face legal redress if it breaks any regulations that govern such transformation. Legal risks represent a real threat to the stability of the organization. Court cases also impact on the reputation of the company. Public relations could worsen as a result of legal battles.

4.2 Ethical Issues in Implementation

Implementing the plan will involve drastically altering the structure of the organization. These changes usually impact on the personnel. Some positions within the organization might be scrapped. This means that the employees are either reallocated or are fired. While the changes are meant to institute growth in the bank, ethical issues come up; for instance, the ethical treatment of employees (Brickley, Smith, Zimmerman, Zhang, & Wang, 2001). Some situations will often require employees to be terminated. However, one has to consider whether the action is justified. Firing a large number of employees, as Cowboy is probably going to have to do, is an ethical issue.

According to the leadership team, the compensation of employees will be restructured so that a part of it is dependent on the sales made. While this is meant to encourage the employees, it can also be seen as exploitation. Is it ethical to tie an employee’s pay to the sales made?

The organizational change will require individuals to relocate to new areas. The bank has a social responsibility to ensure the social satisfaction of its employees. Drastic changes disrupt the lives of the employees. They have to move to new counties and pull their children out of school. Some employees with rigid family situations have to leave their family behind for work. This means that the organization will force families to breakup. The ethical issue here is whether the changes were justified.

These ethical issues are vital to morale within the organization (Brickley, Smith Jr, & Zimmerman, 2002). The bank has to take them into account. To raise morale, the bank should devise plans that will attempt to make up for the issues facing the employees after the change program has been instituted.

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4.3 Evaluating the Change Program

After this plan has been implemented, there’s need to evaluate the program. The results of the organizational change are evaluated and recorded. The leadership team will institute a study of all the areas that have been changed and all aspects that were affected by the program. These include Cowboy bank’s growth rate, employee morale, and state of the sale force and mortgage market share among others. Evaluation is important for various reasons. First, it allows management to keep a record of what was successful and what failed. The successful strategies are the duplicated for other organizational functions. Secondly, the achievements act as motivation for the personnel. Evaluation shows what the bank achieved over the transition period. Employees’ morale will be boosted if they know that they contributed to the achievement of the organization’s goals (Lüscher & Lewis, 2008). Wins are good for morale. To this end, results of the evaluation should be communicated to the employees.

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