The reported study paper has been developed to demonstrate and discuss the order of organisational transformation at the Australia and New Zealand Banking Group limited (ANZ) under the leadership of John McFarlane, the CEO of the banking service during the late 1990s. The superior leadership traits of John McFarlane have influenced the performance as well as productivity of the organisation following more than a few years of distress concert. In the identified reported paper, the main features of the organisational transformation have been illustrated and evaluated during the tenure of MacFarlane at ANZ bank. During the ten-year term of John MacFarlane, the CEO has contributed in a significant way influencing the financial turnover, customer satisfaction standards, and services to the target audience (Graetz, Rimmer, Smith and Lawrence, 2010).
Alternatively, the study has examined the leading challenges for managers those have wanted to implement strategic transformation similar to the ANZ bank. Ideally, the modern managers have tried to implement strategic transformation so that corporate brand of the firm will be improved leading towards internal culture change (Brotheridge, 2015). Last but not the least; drawing significant instances from the ANZ case study on organisational transformation, the attributes of the key leaders have been evaluated leading towards change process at ANZ. Also, the role of leadership has been thoroughly described providing crucial examples influencing the practice of change management at ANZ.
Following a number of years of miserable performance, in the late 1990s, ANZ management hired John McFarlane as the CEO of the banking service. Under the supervision of MacFarlane, the CEO led an organisational transformation programme developing a new management team. The leadership skills and knowledge of MacFarlane contributed immensely to achieve the target of the long-term business viability of ANZ. During the change management initiatives, John MacFarlane realised the opportunities for ANZ for a better financial status (Harrington, Conner and Horney, 2010). The CEO had engaged in a thorough market research in developing the entire change management process. Through analysis of the market, John MacFarlane evaluated that public of Australia was reluctant to trust on the major banking services during the late 1990s (Graetz, Rimmer, Smith and Lawrence, 2010). By considering the fact, the CEO initiated a freeze on branch closures so that community engagement and customer satisfaction can be retained at the highest standard. Thus, the change management of MacFarlane led to restore the trust of the people belonged to the rural community.
Convincingly, another significant feature of the organisational transformation during the ten-year tenure of MacFarlane at ANZ is cost-cutting initiatives. Leading towards change, the cost-cutting drive of MacFarlane resulted in job cuts of the unproductive job positions in the several branches of ANZ. During his management style, MacFarlane lowered the risk profile of ANZ by bailing out substantial investments and capital in the developing economies (Graetz, Rimmer, Smith and Lawrence, 2010). The restructuring of the management operations and hierarchy can be identified as other significant features in the organisational transformation of ANZ under the leadership of MacFarlane. The restructuring involved streamlining and job outsourcing that had evidently contributed to the reduction of employees (Kauko, 2009). As hundreds of staffs had been terminated from their jobs, the cost-to-income structure was influenced in a positive way. For instance, when MacFarlane joined ANZ, the cost-to-income status of the bank was worst.
However, at the end of the tenure period of ten years of MacFarlane, ANZ had the lowest ratio of cost-to-income in the Australian banking system. More importantly, MacFarlane had not made any adjustments regarding customer satisfaction as well as employee satisfaction leading towards change management (Conway and Monks, 2011). Precisely, during the change management and restructuring process, MacFarlane had shifted the focus on the retail customers from the corporate clients to increase the profitability and financial position of ANZ.
Admittedly, the main feature of the organisational transformation of ANZ’s management was converting the brand image of ANZ into the leadership face of MacFarlane. The tactical briefing of the CEO had included three concepts that can be identified as perform, grow and breakout. By following the strategic intervention, the CEO concentrated on value creation. By influencing the commitment of the employees, ANZ had transformed the value proposition in business (Czichos, 2014). Precisely, a shared value had been developed so that ANZ can become the leading performing banking services in the target market. Evidently, MacFarlane identified the need of women in the senior management ranks to increase the diversity in decision-making. Notably, the central idea of the transformational activity of ANZ included a term called breakout that mainly focused on cultural transformation (Blomme, 2012). The breakout strategy had influenced the perception of the target audience as well as the employees leading towards long-term sustainability of business. Also, the ideal strategy has enhanced the understanding of the target demographics regarding the business values of the bank.
The task of restructuring a banking sector organisation is not easy at all, to say the least. Precisely, the transformation strategy implemented by MacFarlane was undoubtedly significant for ANZ in that particular point of time. Currently, the challenges for managers operating in the banking industry are substantially different than a couple of decade earlier. Meanwhile, the entire banking system has been revolutionised by technology. Precisely, adoption of contemporary technology has played a major role in the banking services (Lindberg, 2013). Now the managers need to focus on technology rather than direct interaction with the target market audience. During setting up a restructuring plan, technology has been the crucial factor determining the success (Eacott, 2011). Herein, the security issue and error in judgment can create significant problems for banking services. For instance, using banking related technology can backfire if the security measures are not maintained in an efficient order (Conway and Monks, 2017). Lack of security may increase the chances of financial losses due to internet hacking and online frauds. Therefore, transformation can lead to major issues for the managers governing the banking services.
Moreover, any kind of changes is not easy. In the current financial condition, to expand the market reach and business segmentation of the banking services, significant amount of funding and investment is required by the financial companies. In the existing condition, the banks have to collect capital at an increasing cost (Oke and Idiagbon-Oke, 2007). Hence, the liability and debt of the banks can become comprehensive issues for the management. In order to improve the liquidity structure and balance sheet of banking services, managers need to improve the brand and reliability of the services to increase the retail as well as commercial customers (Yu, 2014). Therefore, such borrowing costs and marketing costs can be expensive at times. The managers need to deal the issue in a cost-effective way without compromising the services and customer satisfaction level (Have, 2017). To implement the growth strategy and restructuring model, modern managers have to increase the confidence among the shareholders and employees to deliver the best. In a combine way, the increasing the professional’s knowledge has been a major challenge for the banking managers as well (Price and Whiteley, 2014).
In the contemporary banking services, employee retention can be one of the most impressive factors leading to success. Therefore, retaining the best talents and management executives should be considered one of the most substantial factors affecting the performance of the services (Pugh and Mayle, 2009). The managers need to identify the best talents attached to the organisation. Based on the performance review, proper remuneration and benefits packages should be offered to the employees to avoid employee turnover (Timmins, 2010). On the other hand, the realisation and judgment of the risks associated with the financial sector is another significant concern for modern managers. Therefore, during the change management, the managers must acknowledge every aspect to make the right decisions improving the culture of the organisation.
The attribute of the key leaders plays an essential role in the successful implementation of the changes in an organisation. According to the case study of ANZ, John McFarlane plays an essential role in leading the changes in the organisational setup to guide ANZ bank towards a new direction of success. John McFarlane is one of the leading figures in the international banking industry and has spent around forty years in serving this sector (Glanz, 2014). John was a Chairman of the Aviva Group, FirstGroup and the Australian Bankers Association. He has served the Australia and New Zealand Banking Group as a CEO for ten years and has leaded the financial institution towards a new direction of success.
John McFarlane primarily possesses transformational leadership attributes that has helped him to successfully implement the changes in the operations of the ANZ Bank. According to John McFarlane, leadership is all about choosing a way to make difference. A leader must reflect on making a differences in the area in which he is passionate about. The passion of the leader can create a difference in the scale to which they inspire others or provide motivation and focus for the organisation (Glanz, 2014). One of the major attribute of John as an outstanding leader is his emotional quotient. He was much aware of himself and the competencies he possesses. On the other hand, he spent a huge amount of time to know his people and their competencies to serve the organisation.
According to Larkan (2009), it is not enough for a leader to have analytical skills (MBA degree) and no people skills. Leaders must have self awareness and be able to build trust among the coordinates (Larkan, 2009). It is important for a leader to build good relationship with the subordinates by communicating effectively and building a quick rapport. In the case of ANZ Bank, John McFarlane was quite able to develop a good bonding with the subordinates that made the subordinates raise query during the retirement of the CEO (Larkan, 2009). Furthermore, John was quite capable of understanding the customers need and led the team through transformational leadership approach to develop a good image among the customers. John McFarlane portrayed all sorts of necessary attributes that are required by a leader to successfully lead the transformation.
It can be seen through the case study that John McFarlane joined the ANZ Bank when it was in a poor position and has effectively led the company towards its success. John was capable to develop a good brand image among the investors and customers through his Perform, Grow and Breakout Strategies. On the other hand, John McFarlane had effectively built the foundation for long term success and sustainable leadership through his emotional intelligence and understanding of his people’s need. By considering the case study of ANZ Bank and the leadership style of John McFarlane, it is quite clear that the leaders play a significant role in the successful implementation of the changes (Larkan, 2009). John has acted as a communicator of the change to make his subordinate support his decisions. On the other hand, John McFarlane’s effective communication policy has helped him to understand the constraints of changes and take necessary steps in order to mitigate the issues. Alternatively, John McFarlane has acted as a coach to teach the employees about the successful implementation of the new strategies and the benefits of customer centric approaches (Glanz, 2014). John McFarlane has acted as an effective resistance manager by implementing his transformational leadership skills and collaborated with the subordinates to minimise the risks of proposed changes. Hence, the role of John McFarlane as a leader has been the primary factor that has helped him to influence, direct and manage the change process effectively.
By the end of 2007, the post of CEO of ANZ Bank has been taken over by Michael Smith who brought further changes that impacted the company with adverse loss of reputation. As the firm was working effectively, the changes made by Michael Smith made it difficult for the stakeholders to rely on the further growth of the firm (Graetz, Rimmer, Smith and Lawrence, 2010). Hence, a change in the leadership role can be evident in the case of ANZ Bank that became a major barrier for the change process. The investors started losing faith over the firm and the loss of jobs made it difficult for the leader to manage the organisation’s reputation. Therefore, the importance of leadership role can be evident in the case of ANZ Bank.
On the basis of the above analysis, the following recommendations are suggested to the ANZ Bank to successfully implement the changes to increase the organisational effectiveness.
Conclusion
By considering the above analysis, the Australia and New Zealand Bank Group has faced several challenges while implementing changes in the operations of the firm. The resistance of the employees and poor trust among the investors have been the major barriers for the leaders of ANZ Bank to effectively lead the changes. The leadership approach of McFarlane has effectively worked for the firm to lead and manage the changes. Meanwhile, the change of leadership in the year 2007 has affected the firm in an adverse way. Hence, it is important for the new leader to adopt a transformational approach of leadership and communicate the changes effectively in order to lead ANZ Group towards its success. Conclusively, the application of change management theory and proper management of resistance to change can be helpful for the firm to survive and seek sustainable growth in the future.
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