Leadership Styles and Organizational Transformation

This assignment delves into the influence of various leadership styles on the effectiveness of organizational transformation. Students are tasked with examining a collection of research papers to identify key trends and insights regarding the impact of different leadership approaches on successful change initiatives within organizations. The analysis should consider diverse leadership styles, including transformational, transactional, and situational leadership, and evaluate their roles in driving employee engagement, fostering collaboration, and ultimately achieving organizational goals during periods of transformation.

Running head: ANALYSIS OF CHANGE MANAGEMENT IN ANZ BANK
ANALYSIS OF CHANGE MANAGEMENT IN ANZ BANK
Name of the Student
Name of the University
Author Note

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Executive Summary
This report is based on the case study of Australian and New Zealand Banking Group
Limited (ANZ) which is one of the most successful and largest organizations of Australia and
a leading banking organization in Australia. The major issues that are discussed in the case
study are problems that were faced by the bank and ways by which the appointment of John
McFarlane as the CEO of the organization has changed the situation completely. The
programs and strategies implemented by McFarlane are also discussed in the analysis. The
report is concluded by saying that the leadership style of the CEOs affects the ways of
organizational transformation.

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Table of Contents
1.Introduction.................................................................................................................3
2.Discussion of the three questions................................................................................3
2.1 Answer 1 - Leadership style or the elements related to change...........................3
2.2 Answer 2 - Internal change in culture..................................................................7
2.3 Answer 3 - Attributes of the leaders....................................................................9
3.Conclusion.................................................................................................................10
References....................................................................................................................11

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1.Introduction
The case study is based on the analysis of the Australia and New Zealand Banking
Group Limited or ANZ. This organization is considered to be the biggest as well as most
successful in Australia and the largest and leading bank in New Zealand. The organization
first originated from the Bank of Australia in the year 1835 in Sydney. The Melbourne office
of the organization was established in the year 1838 and presently the headquarters of ANZ is
also located in this location. The organization has a huge number of shareholders in Australia
and ANZ has its operations in many other countries except New Zealand and Australia which
include, Europe, Dubai, the Pacific, Asia and US (Arnold et al. 2015). The organization has
been maintaining its profitable performance since the time of its inception. They were able to
hold their position and profits even in the year 2008, where there was global financial crisis.
ANZ has been split into mainly five divisions which include, New Zealand, Australia,
Asia Pacific. The retail sector of the organization mainly delivers services like, mortgages,
credit cards, savings, transaction banking and deposits. The organization has been divided
into many divisions which include, Wealth management, commercial banking, institutional
and OTSS or Operations, Technology and Shared Services (Buble, Jurasand Matić 2014).
The discussion in the case study is mainly based on the change management policy and
strategy of ANZ.
2.Discussion of the three questions
2.1 Answer 1 - Leadership style or the elements related to change
John McFarlane was appointed at the post of the CEO of ANZ in the year 1990 after
the organization had faced a tough time within few years. The program related to the
transformation of the organization was designed by McFarlane along with his management
team and the major aim of this program was to achieve sustainable and competitive

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advantage for ANZ that would last for a long term. After the appointment of McFarlane in
the position of CEO ANZ bank had seen better performance related to the finances and John
had received positive reviews related to his style of leadership. The 1990s was a time when
distrust was spread in the banking industry of Australia. This was a result of the closures of
many branches of the banks and the increase in the banking charges as well
(Canterino,Cirella and Shani 2017).
The perception if the Australian citizens towards the banks was that there was
something wrong going on the sector due to which they had lost the trust of people.
McFarlane was appointed in the organization at this time of crisis. The major steps that were
taken by McFarlane included the criticism of the banks for the retreating from the rural
communities, stopped the closure of the branches and also addressed the issue related to the
lack of women employees in the senior ranks. He was considered to be the first who had
taken the issue of corporate social responsibility or CSR in a serious manner. He was talented
in his field was able to sense the trends before his competitors and try to adapt the operations
of the organization accordingly. The initiatives that were taken under the leadership of
McFarlane rapidly changed the perception of the Australian citizens for the banking industry
(Cooper 2015).
The change that was promised by McFarlane arrived quite early in the organization.
The main action that was taken by McFarlane was related to the cost-cutting drive that was
introduced related to job-cuts in the different branches of the organization. He also aimed at
lowering the risk profile of the organization by investing in the emerging markets. The
operations in the head-office of ANZ was restructured, streamlined and hundreds of staff
were emptied from the premises. The cost-to-income ratio of the bank was the highest at the
time of appointment of McFarlane, however, the ratio was brought down to the lowest early
in his term of working in ANZ. The organization started shifting concentration from

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corporate clients to the retail clients so that the business can be increased (DuBois et al.
2015).
The first step related to the transformation of the organization was taken in the year
2000. The major aim of this transformation was to convert ANZ into “the bank with a human
face”. The strategy that was introduced by McFarlane and the leadership team under him was
named as Perform, Grow and Breakout. McKinsey and Co. was appointed by ANZ so that
they can conduct a detailed study about the culture of the bank. The study that was conducted
by McKinsey & Co. revealed many problems related to the existing values of the bank, the
values of the employees and the ways by which they perceive the bank (Farrell, Kawecki and
Branham 2017). The organization had some positive values which were related to result
orientation and goals. However, many of the employees had the feeling that ANZ was
comprised of extreme hierarchy and bureaucracy and the control of information by the
organization is also quite high. The major change that was being made in the culture is
related to the development of the values based on the input of the employees and not the
values that are dreamt by the senior managers of the organization (Fernandez 2017).
The study conducted by McKinsey’s had compared ANZ to other leading
organizations of the country. ANZ fared well in terms of operational and financial
performance, however, the organization had a fall in the other areas which included the
values. The study was made based on 11 measures which include, aspiration or mission,
goals or targets, feedback related to the performance of the business unit, organizational
approach, control and coordination, consequence management, operational control, financial
control, motivation related to rewards, motivation related to opportunities and motivation
related to values. McFarlane then implemented the strategy related to Perform, Grow and
Breakout (Keskes 2014).

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The major element related this strategy is the Breakout which is mainly focussed on
the cultural transformation of the organization. After the implementation of this strategy ANZ
created a process related to cultural transformation and the major initiatives related to this
process are, breakout charters, breakout workshops and breakout consulting. The Breakout
workshops were mainly dedicated towards the personal as well as emotional development of
the employees. The Breakout charters are related to the are related to the business projects of
the organization that are related to the changes in process and transformation of culture.
Breakout consulting is related to the process by which the consulting and diagnostic services
are provided so the they can assist the business units (Malhotra and Hinings 2015). The
Breakout program was implemented on every employee in the organization across all the
units of business. The program lasted for a period of maximum two or three days and the
major aim of the program was give the employees the tools and the time to think deeply
about their motivating factors. The program was also aimed towards helping the organization
in increasing the employee engagement in the various work processes. This program helped
the employees in recognising their aims and the areas of advancement as well (McCleskey
2014).
The change in the culture of ANZ was brought McFarlane after thorough study of the
present culture and thereby implementing meaningful change. This process further required
performance management of the employees to build the people capital as well as the
Breakout strategy. The three major phases that are related to the performance management
process of ANZ are mainly, performance planning, coaching related to performance and
assessment of the performance. The objectives that are set for the performance management
process of the organization need to be measurable and clear (Monzani, Ripoll and Peiró
2015). The employees and the managers together need to set the objectives so that the targets
are achievable in nature. The performance coaching phase includes the regular meetings of

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the employees with the managers so that they can develop their abilities all through the year.
The performance of the employees need to be discussed with the managers and their progress
can be tracked. The major focus is to implement the plans related to the development of the
employees and further ensure that the people are supported and given opportunities so that
they can succeed in the future. The assessment of the performance is related to the review of
the performance of the employees within the year (Nanjundeswaraswamy and Swamy 2014).
The above discussed points are therefore the major features of the transformation of
the organization after the appointment of McFarlane as the CEO of ANZ.
2.2 Answer 2 - Internal change in culture
McFarlane introduced many programs that were thorough and clear in nature and
were mainly designed for the identification, assessment and the development of talent in the
organization. The programs were implemented mainly to help the process of talent
development among the managers of the organization. The quality control process of the
internal management of talent and the change in culture is related to the external assessment.
The major focus of ANZ has always been on the development and learning of the employees
at all levels of the job. The global systems are used in the organization to ensure that the right
knowledge reaches the right employees and at the perfect time (Saeed et al. 2014).
The internal cultural change was brought in the organization with the help of three
leadership programs introduced by McFarlane. The investment in the leadership of the staff
mainly starts with recognition and the identification of the potential of leadership within the
stream of management. The program that is run within the organization by the HR managers
and the line managers was known as “The Emerging Leader Radar Talent” program. This
program is mainly related to the identification of the leaders and the assessment of their
potential as well (Saleem 2015).

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The implementation of the programs related to the engagement of employees and their
development had to face some major challenges in ANZ. The main challenge was related to
the engagement of all the employees in a huge organization like ANZ. Another challenge that
was faced by McFarlane was gaining the support of all the employees regarding the change in
the culture of the organization. The strategy that was taken to address these challenges were
the implementation of the changes in both the top management as well as the lower level
employees, instead of starting the process from the management and the then the employees.
The main aim of McFarlane was to build high levels of trust between the employees, the
management and the CEO of the company (Sethuraman and Suresh 2014).
The staff surveys on the internal basis had shown significant improvement after
implementation of the different programs. The satisfaction levels have shown steady increase
from 50% in the year 1997, to 62% in the year 2001, 78% in 2002 and 85% in the year 2004.
The achievement related to the increased levels of employee satisfaction have helped ANZ
focus their concentration on more complex issues like engagement of the employees which is
related to the levels up to which the staff are committed towards their employer and are
motivated to give their best performance to the organization. ANZ was able to address this
challenge as well by achieving the level of 58% in the year 2004 and this percentage rose to
63% in the year 2005 (Shani and Noumair 2017). The success related to the engagement of
the employees of ANZ in the work process of the organization has been increasing since then
and this has helped ANZ to gain the position of having the most engaged workforce in a
global organization. The change in the culture of the organization is an ongoing process and
the leaders who implement these strategies need to learn a lot during this process.
Another major issue was faced by ANZ during the tenure of John McFarlane. This
issue was related to the time when the bank was exposed to the industry of US
telecommunications. The collapse of the industry during the start of the year 2000 had

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affected the organization immensely. The abilities of McFarlane regarding the management
of the senior employees also came into question (Sommer, Sprog and Andersen 2017). The
bank had to face many challenges from its competitors like Commonwealth during the tenure
of McFarlane. Some of the wrong decisions that were taken by him had affected the
organization negatively.
2.3 Answer 3 - Attributes of the leaders
John McFarlane was brought in the organization during its crisis period and he did his
best to bring back the position of ANZ. The initiative that was by McFarlane to address the
issues that were faced by ANZ was to convert the bank in to “the bank with a human face”.
Another major step included the importance that was given by McFarlane to corporate social
responsibility. McFarlane had the thought of involving the employees in setting the targets
and objectives for ANZ. The leadership style of McFarlane mainly stressed on the issue of
employee engagement. McFarlane was successful in making changes in the culture of the
organization by achieving high levels of employee engagement (van Prooijen and de Vries
2016).
The new CEO of ANZ after McFarlane was Michael Smith and he was qualified
enough to take the organization forward. Under the leadership of Michael Smith ANZ has
proved to stable and strong and has qualified as one of the many AA rated organizations in
the world. Smith aimed at bringing ANZ to the topmost position by increasing the capital,
improvement of liquidity and strengthening of the balance sheet. The restructure and the
change in brought in the employee base had resulted in the loss of jobs for many employees
in ANZ. The leadership of Smith was therefore more focussed towards the efficiency and the
profitability of the organization rather the employee engagement (Sethuraman and Suresh
2014).

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3.Conclusion
The report can be concluded with the learning the leadership style of the companies
affects the culture of the employees. The transformation of an organization and bringing
changes in the culture is not an easy process for the employees as well as the management.
Transformation is an ongoing process and it involves the managers and the employees. The
managers can also learn a lot from the process of transformation in the organization. It can
therefore be said that organizational change is affected by the leadership style.

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References
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emotion regulation, and burnout. Journal of Occupational Health Psychology, 20(4), p.481.
Buble, M., Juras, A. and Matić, I., 2014. The relationship between managers’ leadership
styles and motivation. Management: journal of contemporary management issues, 19(1),
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