ANZ Bank Change Management Analysis

This assignment analyzes the successful implementation of change management strategies at ANZ Bank. It examines specific initiatives undertaken by the bank and their impact on various aspects of the organization. The analysis utilizes Kurt Lewin's three-step change model (unfreeze, change, refreeze) to evaluate the effectiveness of ANZ's approach. The document also identifies areas for potential improvement in ANZ's change management process.

Change management theories 1
THE IMPACT OF CHANGE MANAGEMENT THEORY ON ANZ
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Change management theories 2
The Impact of Change Management Theory on ANZ
Executive summary
Change management processes are often modeled on an understanding that change
occurs in a linear form through the succession of goals. There are various types of change
management theories such as life cycle, teleological, evolutionary, and dialectical. The
Australian and New Zealand Banking Group Limited underwent an organizational
transformation process under John McFarlane which resulted in improved performance and
increased employee satisfaction. However, after Michael Smith took over the company has been
facing challenges in way employees practice the company’s culture. Therefore, in this paper, the
problems that have occurred after the change process of Australian and New Zealand Banking
group are analyzed using Lewin’s three-stage change process theories. Moreover, there are
recommendations which encourage the implementation of change using the theory as a guideline
as illustrated.
Introduction
Change management process theories are theories that explore the transition process of an
individual or organization (Tan, 2006). There are four types of process theories; life cycle,
teleological, evolutionary, and dialectical (Hayes, 2014). These theories differ based on how they
depict change. For life cycle and evolutionary, change is a process that is predestined. Contrary,
teleological and dialectical depict change as a process that involves the achievement of goals and
can be changed by those involved. In addition, change can be illustrated through Lewin’s three -
stage process (Cooke, 1999). The first stage is unfreezing where the members of an organization
are made aware of the need for change. This encourages them to look for alternative ways. The
second stage is moving where people change their attitudes and beliefs to enable the change of
behavior through modification of processes. The last stage is refreezing requires practices that
strengthen the new behavior which sustained the required level of performance (Kritsonis, 2005).
Moreover, the evaluation of the entire process to measure its effectiveness is encouraged.
Finally, a reward system can be established to reward those that encourage the accepted
behaviors.
For this essay, the focus is on Australian and New Zealand Banking Group Limited
(ANZ). Currently, ANZ is ranked among the four top banks in Australia and the largest in New
Zealand with its head office in Melbourne. Globally, it is ranked among the top fifty banks.
Traditionally, it started as the Bank of Australasia in 1835 and opened its first office in
Melbourne in 1838. Therefore, the bank’s history goes beyond 180 years. It provides banking
and financial services to a wide range of customers. The company’s Chief Executive Officer is
Shayne Elliot. The organization operates globally with thirty-four markets within Australia,
Europe, America, the Middle East, and Asia. In 2016, it won the CANSTAR’s Bank of the Year
award (Anon, n.d.). This essay focuses on the challenges the company was facing in 2008
especially those that affected the performance of the employees. ANZ had to take disciplinary
action on two employees who breached its code of conduct after it clearly stated its values in the
same time period. Clearly, the employees were not living the company’s culture. Using the
change management theory, the essay explores the problem and provides recommendations.

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Background information
In 2008, ANZ had five main divisions. The Australian division dealt with the provision
of banking services to retail, commercial and wealth management clients in Australia. Similarly,
the New Zealand and Asia Pacific did the same in New Zealand and Asia respectively (Graetz et
al., n.d.). The institutional division provided banking services to institutions and corporations
around the world. Lastly, the Shared Services division handled the provision of technological
solutions. Additionally, it catered for operational risk and project management. Presently, the
bank has added divisions namely; digital banking, Asia Retail and Pacific, technology and
Corporate center. The bank’s customer segment consisted of retail, commercial, wealth
management, institutions, and corporations. The retail group comprised of retail clients while the
commercial group comprised of small and medium enterprises. The wealth management group
comprised of high net worth people and the corporate group had large corporations.
Presently, it is actively involved in the use of technology to provide financial services.
For example, in 2016, it was the first bank to launch the Android pay which allows payments
through Android devices such as mobile phones. Secondly, in the same year, it launched the
Apple Pay which allows transactions through Apple iPhone and Apple Watch. Additionally, in
2013 it had been a new internet banking site. The company has also started programs that have
managed to do very well. For instance, the Saver Plus program was recognized in the Financial
Literacy Australia Awards in 2015. The program is used to improve the lives of low-income
earners’ families by providing ways to develop saving habits and build assets for the education
of their children. Further, a report conducted in 2015 indicated that 15,000 participants had saved
approximately $13.5m Another program is the MoneyMinded that was developed to educate
adults on financial literacy was also recognized for the same award in 2015. The bank is also a
member of the United Nation’s Environment Program Finance Initiative and it issued the first
green bond to support the transitioning process to a lower carbon economy in 2015 (Graetz et al.,
n.d.).
In the late 1990s, ANZ had a poor performance so John McFarlane was appointed as
CEO to rectify the situation. MacFarlane appointed a new management team that assisted him to
establish a transformational program that led to higher performance through long-term
competitive and sustainable advantage. This was achieved through lowering the risk profile of
the bank and improving the cost-to-income ratio (Graetz et al., n.d.). He improved the cost-to-
income ratio by reducing the number of employees and focusing on high-earning retail
customers. Despite the success, an evaluation done by McKinsey & Co revealed that the bank’s
cultural values were not being followed. The employees complained about a lot of bureaucracy
which resulted in too much control of information. Consequently, the company developed
Perform, Grow and Breakout strategy to drive change. Moreover, two surveys namely;
performance ethnic and values assessment, were conducted. From the results of both surveys,
the management team was able to further develop the Perform, Grow and Breakout strategy.
For this essay, the focus is on the breakout since it deals with cultural transformation
which was aimed at reducing bureaucracy. It was divided into three initiatives. First, breakout
workshops where employees had to evaluate how their values affected their behaviors which
affected their interactions in the workplace. Second, the breakout charters which dealt with
process changes that supported cultural transformations. Lastly, breakout consulting provided
consulting services to help in the implementation. To evaluate the success of breakout,
performance management was introduced. Performance management has three phases. The first
is performance planning which involves the setting of achievable goals that are in alignment with

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the company’s objectives. The second is performance coaching where the employees’ track their
progress and plans are implemented with the help of managers. The last is performance
assessment where a review is generated and rewards are given depending on the outcome.
Ultimately, the employees are ranked with 20% being top, 70% in the middle and 10% bottom.
Overall, the employees were expected to outperform hence high productivity then they get paid
for performance in form of bonuses. The strategy worked with staff engagement improving to
85% in 2004 from 62% in 2001 (Graetz et al., n.d.).
In 2008, the company appointed a new CEO, Michael Smith. In June the same year, ANZ
established the values that it must uphold which are integrity, collaboration, accountability,
respect and excellence (Graetz et al., n.d.). However, the company still faces challenges in
upholding its values. In August, an internal report revealed that the bank was involved with Opes
Prime, a failed broking house. As a result, two employees resigned. The report also criticized the
performance of the managers since they procrastinated and failed to address the issue in an
effective manner. A plan of action was implemented to correct the problem. Taken together, this
means that there is a problem in the implementation of the values that the company upholds.
Discussion
In the change process theories, there are self-reinforcing sequences. These occur when an
action creates a positive feedback which supports change direction (Hayes, 2014). In addition, it
strengthens the ideas that had been made prior. This approach can deliver results in the short
term but may deliver suboptimal results in the long term. This can be achieved through
increasing returns. For example, in the case of ANZ, the breakout strategy has continued to
deliver high performance over the years. When the Opes Prime issue occurred, the CEO took
disciplinary action on the staff and restructured risk management but did not address the culture
of the organization. In fact, when McFarlane was asked about the report which criticized
management he claimed that the issue did not reveal the cultural and ethical challenges the
company was facing. He also went ahead to quote the success rate of his time in management.
Evidently, the company is sticking with the proven way of doing things hence self-reinforcing
sequences. Overall, this reveals that the organization was hesitant to change the implementation
strategy of the cultural values.
Another factor that may contribute to the self-reinforcing sequences is cognitive biases.
This is where leaders pay more attention to factors that support their decisions (Hayes, 2014).
This is often in situations where the leaders have experienced past success. This is because
leaders usually reflect on their past decisions when making new ones. In such case, information
that is inconsistent or negative is not taken into consideration. For example, in ANZ the negative
feedback about the cultural and ethnic values of the organization may not be taken seriously
especially when the prior CEO who maintained a high performance belittles them. This means
that change may not be easily accepted by the staff.
According to Lewin’s theory, the second stage, moving, entails the change of attitude and
beliefs. These were identified as the forces that drive change. For ANZ, there was the
implementation of the breakout strategy which resulted in high performance but the underlying
attitudes of the employees seemed to have remained constant. This is depicted by the fact that
before the breakout strategy was implemented the survey conducted by McKinsey & Co revealed
that employees were not living according to the cultural values of the company. Later on, in 2008
after the strategy had been implemented for approximately eight years the values of the company
are violated and the management team is slow in addressing the issue. From the above scenario,
it is correct to assume that some employees did not change their attitudes and beliefs.

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The unfreezing phase in Lewin’s theory emphasizes the need for a system that supports
the change. This means that the barriers that hinder the sustenance of change are identified.
Afterward, the change team ensures that those barriers are removed. In ANZ, the management
team had established performance management to evaluate employees and ensure the breakout
strategy is still being implemented. They also created a reward system where well-performing
were rewarded with bonuses. Earlier on in 2008, the company had also evaluated the culture of
the company and clearly outlined the value. From the above, the company has done a
commendable job in sustaining the change. However, it needs to reevaluate the barriers of
change.
Recommendations
In order to avoid self-reinforcing sequences, management needs to acknowledge the
existence of factors that affect change. In this case, there is the high returns and cognitive biases.
Therefore, ANZ needs to forget about the standard way of ensuring the staff is living the
company’s culture. To achieve this, management needs to be reminded the possibility of choice.
This means that they are allowed to choose a different way of doing this even though it may
lower returns in the short term. They also need to be instructed to embrace Michael Smith’s ways
of doing things since the reign of McFarlane is over. Lastly, they should not selectively agree
with what their former CEO claims.
From Lewin’s theory, the management team can rectify the moving stage. According to
Lewin, there is need to change the attitudes and beliefs of people to create sustainable change
(Cummings et., 2016). Therefore, the management needs to reinforce the breakout workshops
and redirect them towards personal development programs that encourage the change of one’s
attitude. To create this change, management needs to remember to revisit the first stage where
they are required to create a need for change. This is done through analysis of the situation that
requires change and convincing the staff that change is required. Additionally, the change team
needs to deal with resistance when it occurs to ensure everyone is on board. This is also done to
avoid challenges that may arise later in the change process.
In addition, all stakeholders need to be involved in the change process (Robbins, 2003).
In ANZ, the breakout strategy was implemented mainly through the collaboration of the senior
management team and the rest of the staff. Notably, this strategy led to the tremendous success
that was carried on for ten years. Similarly, the current senior management team needs to involve
everyone in the change process for it to succeed. For example, in the attitude change initiative,
the employees need to be asked their opinion on ways to change their attitude. They also need to
be asked for feedback on the entire process to ensure that they are not showing signs of
resistance.
From the analysis done, it is clear the company is doing well in the unfreeze phase.
Nevertheless, it may need to identify the current barriers that affect the change process. For
example, the company needs to identify the factors that led to self-reinforcing sequences which
limit choices. This is because the management team is not addressing the current issues that are
facing the culture of the company. This has led to issues that affect the credibility of the
company and loss of jobs. Another barrier is the fact that employees are not collaborating. This is
because McFarlane failed to groom someone to take his position despite the fact there is a
leadership development program that deals with succession planning. This may also mean that
some of the managers do not perform the coaching process well. To improve on this, the
management team needs to come up with a plan to encourage coaching and support systems

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Conclusion
Clearly, ANZ is an organization that embraces change and uses it to steer the direction of
the company. Through change, the company was able to gain higher returns and better customer
and employee satisfaction. The company was also able to create a culture where employees
strive to outperform and values are not compromised. Though it has faced challenges in this
period, it is clear that there are still strategies that can be used for improvement. It was worth
noting that change is a continuous process with constant learning and improvement and ANZ is a
great example of what change can do.
References
Anon, (n.d.). History | ANZ Shareholder Centre. [online] Available at:
http://shareholder.anz.com/our-company/profile/history?

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Cummings, S., Bridgman, T. and Brown, K.G., 2016. Unfreezing change as three steps:
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Graetz, F., Rimmer, M., Smith, A. and Lawrence, A. (n.d.). Managing Organisational Change.
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Robbins, S. (2003). Organizational behavior. India, Delhi: Pearson Education.
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