Organizational behavior (OB) describes the study of individual and group discernments in an organizational background as well as the nature of the organization itself. Organizational behavior seeks to understand the behavior of organizations so as to develop competencies to study how people are likely to behave and guide these behaviors towards following company’s objectives. The OB is an interdisciplinary field that embraces sociology, psychology, communication, and management. The OB accompanies organization theory that focuses on organizational and intra-organizational subjects and supplements human resource concepts.
The OB also advocates for organizational change when it is necessary. Change is always necessary as it is inevitable. The world is always changing and, thus, organizations should keep changing to keep up with the trending environment though in many cases people resist change. Change should be properly managed to ensure it is successfully implemented. The current paper seeks to indicate external and internal forces of change, identify methods applied to initiate and implement change, assess the role of transformational leadership in bringing about cultural change, determine the role of management functions in managing change, consider Kotter’s eight-step change process, and evaluate the implementation of change in AEGON.
Internal and External Forces of Change
Change is unswerving, inescapable, and unchangeable. Every organization should be receptive to change, failure to which will cause difficulties in the long term (Graetz & Smith 2010). An organization can be affected negatively or positively in the way it operates by occasions called driving forces that can either be internal or external. Internal driving forces transpire from within the business and can be controlled by the company. External driving forces are forces that affect the firm from outside and are beyond the control of the organization (Graetz & Smith 2010). Just like any other company, AEGON is also pursuing change. AEGON conducted an audit that discovered that it was firmly positioned inside the market but it was not well-known out there like its opponents. The core goal for AEGON to pursue change was to become the best long-term savings and security business in the UK. For this goal, AEGON had to respond to internal and external forces to achieve it. AEGON’s internal forces for change include organizational culture, management systems, financial management, and workforce development (AEGON embracing and pursuing change n.d.).
Culture is the personality and attitude of an organization. AEGON found culture to be a main part of the change process and, hence, it decided to adopt a new culture, i.e. beliefs, values, and behavior of employees. The change in culture was a clear determinant on how AEGON was going to make decisions and solve problems. AEGON developed a behavior framework to support its brand values. The behavior framework entailed eight behaviors, i.e. think customer, embrace change, encourage excellence, act with integrity, act decisively, teamwork, learn and grow, and relate and communicate (AEGON embracing and pursuing change n.d.). This behavioral framework helped to improve performance of AEGON as it focused on customers who were its vital stakeholders.
Financial restructuring had to be done in the UK as AEGON’s brands had to be restructured to catch the customers’ eye. This influenced the brand reputation and attracted more customers. Financial objectives are essential as the path for future developments depends on them. For instance, conducting promotions to market AEGON required funding. The public had to be educated and made aware of what they were buying, as well as of the benefits and services they received (AEGON embracing and pursuing change n.d.).
AEGON’s change plan led to developing a motivated workforce that could work relentlessly towards achieving the goal of the new CEO. The CEO developed training programs to equip employees with skills that made them embrace change and further created job opportunities for career progression (AEGON embracing and pursuing change n.d.).
AEGON’s management systems also prompted change since an organization’s success is stretched by satisfied employees as they are the most important resource in realizing organization goals. The new CEO introduced a discovery phase that incited the conduction of an audit to point out the problem that hindered AEGON from excelling globally. He also addressed the public in the media about the change process and reasons for change; hence, his model led to good results.
External driving forces of AEGON entail competition, its operating industry, economic factors, socio-cultural environment, and international environment (Hiriyappa 2009). AEGON is facing stiff competition from its contenders. Its competitors directly deal with consumers in the UK since they are well-known and are strategically positioned, hence being in the minds of customers. This intense competition made AEGON advertise itself widely so as register itself in the minds of the consumers. They also did celebrity advertising whereby AEGON established relationship with Shirley Robertson who was a female athlete winning gold medals (AEGON embracing and pursuing change n.d.). These promotional activities yielded fruits and today AEGON’s products are widely known and are reputable. It also had to develop new products to compete in the market as its rivals were developing new less expensive products. AEGON has launched a 5 year-life annuity policy that is doing very well in the market and has changed the way the public perceives retirement income. This new brands has helped AEGON to gain a competitive advantage in the market and has even influenced its financial services (AEGON embracing and pursuing change n.d.).
AEGON belongs to the insurance industry; in the recent past, this industry had a poor reputation where some organizations were accused of mis-selling, i.e. failing to provide customers with the best products for their needs. The Financial Services Authority (FSA) imposed regulations on the participants to avoid such problems (AEGON embracing and pursuing change n.d.). AEGON, being a participant, must adhere to these regulations.
The economic factors led to change in AEGON since the government imposed control prices, which pulled it down, thus reducing its profitability (AEGON embracing and pursuing change n.d.). AEGON had to get back on its feet by advertising itself. AEGON was only known well by distributors it used to sell its products to, i.e. Scottish Equitable. This caused confusion among the public as they did not understand the breadth of what AEGON did as it traded under so many names. By doing so, AEGON advertised its products and generated more revenues since many consumers got to know about it and its products. This enabled it enjoy the economies of scale in the market, e.g. establishing a bigger customer base.
The international environment made AEGON advertise itself so that it could be known globally as it was not well-known. AEGON had to develop brand and reputation to penetrate the market. In the UK, Scottish Equitable is now AEGON Scottish Equitable and it is much stronger (AEGON embracing and pursuing change n.d.). AEGON developed a new socio-cultural behavior that could serve consumers both locally and internationally and ensure that all customers were contented.
The Role of Transformational Leadership in Bringing Cultural Change
Transformational leadership is a governance tactic that bases change on individuals and social arrangements (Srivastava 2003). This leadership crafts a valuable and positive change in its followers with the end result of developing them into leaders. Transformational leadership boosts enthusiasm, optimism, and performance of its supporters. The organizational culture affects leadership of a business. Transformational leaders work within their organizational culture, following prevailing rules, processes, and customs. Transformational leaders change the culture by first understanding it and then aligning it with the organizational culture. These leaders are characterized by four components known as the 4 Is, i.e. idealized influence, inspirational motivation, intellectual stimulation, and individualized consideration (Srivastava 2003).
Transformation leadership helps to change the culture and adopt a benefitting culture in the following ways. Transformational leaders develop an attractive and challenging vision with their employees; the CEO of AEGON came up with a good vision of adding value to its brands, involved employees, and then tied the vision to the brand strategy so as to achieve the desired outcome by changing the culture to become a market leader in UK. The cultural change was also prompted by expressing confidence, decisiveness, and optimism. Employees of AEGON together with their CEO were optimistic that they would make it internationally and become the market leader and they did. They realized their goal through following the behavioral framework that was developed step by step and eventually their culture was all changed in terms of the way they behaved and communicated (AEGON embracing and pursuing change n.d.).
The Role of Management Functions in Managing Change
Efficient administration implicates imaginative problem resolution, employee inspiration, and confirmation that the organization achieves its set goals. Management tasks include: planning, organizing, staffing, leading, and controlling (Tracy 2014). In dealing with change, AEGON’s manager should plan its activities well to accomplish its goal of becoming the best long-term savings and protection business in the UK. AEGON should also organize its employees and resources and give them authority to realize the goals outlined. The AEGON manager should further manage the staff and place each individual where he/she is best suited to accomplish the company’s goals. The manager should also lead the team towards managing change through communication, motivation, and guidance (Tracy 2014). The AEGON manager should keep checking the work in progress and ensure employees are headed on the right track and, if not, take necessary corrective actions to ensure they are on track.
Kotter’s 8-Step Change Process
AEGON embraced Kotter’s eight steps that he perceived to be essential in successful organizational change. This model is simple to understand as it prepares employees before vision creation. The steps include: establishing a sense of urgency by examining the market competition and identifying potential opportunities to strike, creating a catalyst for change, forming a mighty coalition that will lead people to change, creating a clear vision that will help in directing the change effort, communicating the vision to followers, empowering the followers to act on the vision by getting rid of obstacles to change, creating short-term wins where improved employees should be rewarded, building major activities around change, and ensuring that the change is anchored in the corporate culture (Kotter 1996).
When the audit was conducted on AEGON, it indicated that change was necessary, especially concerning the global environment where AEGON was not well-known. When implementing change, AEGON embraced the following tips that ensured successful change implementation. AEGON ensured that its entire staff was motivated to improve its practices and that it involved all the stakeholders (Senior & Fleming 2006). Change implementation entails three main stages, namely: communicating the justification behind the necessity for change (AEGON communicated to its employees that change was needed so as penetrate the UK market); the change should be implemented in phases, i.e. incremental change (though it reduced AEGON’s competitiveness); and the change should be assessed and a report on change should be presented, i.e. keen monitoring should be conducted to evaluate the impact of change and assess its success (Senior & Fleming 2006).
There comes time in the business world when change is mandatory and it must be implemented to ensure survival of the organization. An independent examination was done on AEGON and it indicated that change was necessary for it to realize its goal of becoming the best long-term savings and protection business in the UK, especially in the outside environment where AEGON was not well-known. The new CEO took AEGON through a discovery process where he initiated change and ensured that his goal was achieved. It was done mainly through promotions and addition of value to its brands , which enabled the company to lead the market.
Organizational change can be prompted by different forces, including either internal or external forces. Internal forces can be controlled by the organization, but external forces are beyond the powers of the firm. AEGON’s change resulted from both pressures. Transformational leadership also leads to culture change. Transformational leadership pursues to add value to its followers and guide them to realize their objectives.
Change is always a new thing; hence, it should be introduced in phases for it not to be resented and resisted. Though incremental change reduces competitiveness, it is sometimes the only way to warrant that change implementation is successful. Employees should be included in the change process and should be told in advance about the change. Kotter’s model explains the change process in detail. In short, the change has led to AEGON rebuilding its brand reputation. AEGON has become customer-focused and has also started providing innovative products and gained popularity, hence growing significantly.