Leadership and change management: A real organizational case

Table of Contents
Background..................................................................................................................................................2
Introduction of Organization...................................................................................................................2
Service delivery....................................................................................................................................2
Introduction of Case................................................................................................................................2
PAB modus operandi...........................................................................................................................3
Change.........................................................................................................................................................4
Need for change......................................................................................................................................4
Analysis....................................................................................................................................................4
Force Field Analysis.................................................................................................................................9
Theoretical Analysis...............................................................................................................................10
Type of change..................................................................................................................................10
Analysis via Kurt Lewin’s model.........................................................................................................11
Change Management................................................................................................................................13
Resistance..............................................................................................................................................13
Management of Resistance...............................................................................................................14
Role of leadership......................................................................................................................................15
Evaluation of Change.................................................................................................................................16
Conclusion and recommendations............................................................................................................17

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Leadership and change management: A real organizational case

Background

Introduction of Organization
Employees Provident Fund (EPF) is the only social service organization in the country. It also
enjoys the reputation of being the richest organization in the country. Though its history dates
back to 1934 BS it was in the year 1959 BS, Employees' Provident Fund Department was
established under the Ministry of Finance and Economic Affairs.

In today’s context EPF provides following facilities

 Manages the provident fund of individual employees from organizations enrolled in EPF.
 Provides interest on the funds
 Provides loan against the provident fund of individual employees
 Provides social security services (e.g. Accident insurance, funeral grants, additional fund
0.33% of available fund in employees account)
 Provides loans to build houses to the contributors/clients.
 Provides education loan for studies inside the country and abroad.

Service delivery
Services are delivered to clients from its Pulchowk branch (house-loan, education loan), and
other branches located at Thamel, Dhankuta, Biratnagar, Hetauda, Butwal, Pokhara, Surkhet
and Dhangadi (loan against PF, additional benefit service) 1. EPF categorizes its contributors
based on the sector their organization belongs to. It divides contributors into following major
categories

 Civil
 Police (Genera and Armed)
 Army
 Education
 Corporation

At Thamel there are different sub-department or sections for each group. Each section is
headed by a manager (Level 8)and consists of senior officers, officers, and senior assistants.

Introduction of Case
Employees Provident Fund also provides social security services beside management of
provident fund. As social security services it provides funeral grants to the families of
employees who dies before retirement, it has also been distributing the accident insurance
1
Biratnagar, Hetauda, Butwal and Pokhara also provide House loan and education loan facility

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Leadership and change management: A real organizational case

fund to police/armed police or their families who had major injuries or minor injuries 2 or who
lost their lives during the time of Maoists insurgency, it provides retirement grant to employees
which is 0.33% under the scheme called “Additional benefit scheme”.

Till 2065 BS these services were provided only through Thamel branch of EPF but from 2066 BS
these services were also available at branches. At Thamel there was a special section called
“Pension and Additional benefit section” (PAB) that provided these services. It was located in
the first floor of EPF building, Thamel and had around 12 staffs. The department was headed by
a manager (Level 8), had one senior officer (Level 7), one office (Level 6) and other senior
assistants (Level 5). This section associated its identification with the distribution of “additional
benefit service” (ABS) rather than with insurance distribution and funeral grant.

In the year 2066 Falgun a circular was sent to branches which stated that the additional benefit
will be distributed from corresponding sections and for the time being the PAB would only be
associated with distribution of funeral grants and accident insurance 3. It led to partial
dissolution of PAB section and it has been reduced to 4 staffs. In the changed context the
management is trying to dissolve PAB section in its entirety.

This report deals with how “Additional Benefit Service” of PAB was merged with the other
section, how the change process was carried out. The change would be analyzed in the
theoretical context.

PAB modus operandi

Additional benefit is provided only to retiring employees whose PF deduction has been regular
for at least 3 years. When a contributor comes with retirement letter his payable amount is
calculated in the corresponding section (Civil, Police, Army, Education and Corporation). The
sections also calculate the amount of additional benefit that the individual is entitled to.
Transaction is carried out and a voucher and a token is issued to the contributor asking him to
go to the PAB section where his additional benefit transaction is validated, and another set of
voucher and token is given. The contributor goes to the cash section where the payment is
made.

2
The criteria of major and minor injuries are clearly defined by Government
3
Accident Insurance scheme has also stopped now.

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Leadership and change management: A real organizational case

Change

Need for change

The service mechanism was clearly not efficient. Contributors had to bounce back and forth
between at-least three sections (corresponding section, PAB section and Cash section). He/she
had to carry two sets of vouchers (in average 5 sheets of paper) and tokens (one from
corresponding section and other from PAB) while contributors have been demanding one-
window service. The role of PAB section was not significant as it only validated the transaction
carried out at other sections and issued token. PAB did not even calculate the pension amount
an individual is entitled to because the information regarding job tenure, contribution
deduction would be at the corresponding section. It was actually serving no purpose but was
only adding unnecessary bureaucracy and hassle to contributors. Change seemed imperative.

Analysis
Triggers:

 Customers’ complaints about unnecessary hassles

Customer’s filed complaints frequently that they had to wait in long queue twice, once
in their respective section and then in the PAB section. Despite use of computers they
had to move from one department to another carrying unnecessarily large number of
papers and two tokens. Many times even after waiting for a long time for their turn to
come, the tellers at PAB sent them back to their respective section citing there had been
problem in calculation. Since these sections are not in the same floor, it was difficult for
customers to move between various sections.

 Management’s policy to scrap the “Additional Benefit Scheme” in the near future
Management had also identified that additional benefit was becoming more of a burden
to the organization, so they were thinking about profit sharing scheme that was more
transparent and easy to manage. So it had to make preparations accordingly.

 Management’s strategy to adopt one window service delivery mechanism

To make the service delivery mechanism prompt and efficient, the concept and
blueprint of one window service delivery model has been developed. Doing away with
one unnecessary window was a move toward the desired objective.

 Lack of resources
EPF manages accounts of more 0.4 million employees and this is done by around 300
staffs. The sections are always complaining they need additional manpower. On the

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Leadership and change management: A real organizational case

other hand the other resources like printers, computers, scanners etc. would also free if
PAB’s functionality was reduced.

 No control of errors
The main concept behind PAB validating additional benefit calculation (calculation done
at respective departments) was to check errors, however the number of errors
multiplied rather than dropping.

 Section chiefs willingness to carry out ABS transactions from corresponding sections
In formal meetings, seminars and paper presentations section chiefs extended their
willingness to carry the ABS transactions in their own sections (Civil, Police, Army,
Education and Corporation).

 Unnecessary complexity in accounting reconciliation

Account department has to carry out reconciliation of transactions carried out by
several sections with cash and banks. They had to reconcile the same data of Additional
Benefit twice one with the corresponding sections and other with the PAB section, so it
had added unnecessary complexity.

Targets:

 Customers
The main targets were obviously the customers. The change aimed to bring efficiency in
service delivery and hence enhance customer satisfaction.

 Employees
Since there was a resource (manpower) crunch in other sections the employees at PAB
could be transferred to the understaffed sections.

 PAB section
The change was clearly to reduce the functionality of the PAB section.

 Account section
The change program also targeted to simplify the reconciliation process carried out by
account section.

 Computer program

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Leadership and change management: A real organizational case

Necessary changes were to be made in computer programs so that corresponding

section would be able to provide additional service.

Outcomes:

 Better customer satisfaction

Since customer now could get loan or payment at only two windows (one at functional
section and other at cash) they didn’t have to stand in queue repeatedly. Hence it
enhanced customer satisfaction. In average response time has been reduced by 15
minutes.

 Merger of Additional benefit services with corresponding sections

At the end of the implementation additional benefit service of PAB section was merged
with the core functions of corresponding sections.

 Efficiency of operation
In average response time reduced by 15 minutes.

 Simplified reconciliation process

Since there was no need to reconcile with PAB section the reconciliation process was
simplified (Account still had to reconcile for funeral benefit and accident insurance).

 Efficient use of resources

Since the major function of PAB section was taken away, it freed away around 75pc of
its manpower who were then relocated to other sections struggling due to
understaffing.

 Modifications made in computer programs.

All transactions at EPF are carried out by computers. There were separate modules for
PAB section whose functionality was not available at other department. Modifications
were made in computer programs so that these modules were accessible to tellers at
sections.

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Leadership and change management: A real organizational case

Force Field Analysis

Restraining Forces

-6
-5 Excessive work load at sections
Inflexibility of computer
-4 Staffs at PAB program

-3

-2

-1

+1 Willingness of
+2 section chiefs Need for resource
usage maximization
+3 Customer’s
complaints
+4
Board’s intention to
+5 Pushing Forces
scrap AB scheme
+6

Pushing forces

The board had made up its mind that AB scheme need to be scrapped as additional benefits
were not transparent, not participative and not scientific. This was the major pushing force.
Customer’s complaints should have been the major pushing force but unfortunately customers
are not given proper care in many government owned organizations. However in case of EPF
complaints had become significant and too frequent.
In organization that was struggling with limited manpower, 12 employees out of which 8 were
simply validating transactions which computer programs could do automatically. The section
chiefs also showed their willingness to provide Additional benefit services from their sections.

Restraining forces

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The staffs have been complaining of too much work to handle in their sections. They had been
asking management to provide more staffs so that the work load could be minimized. The
errors had also become frequent as they were pressed to work faster by customers, addition of
another functionality would only worsen their situation. The workload would increase
significantly. They were not supportive of the idea.

Employees at PAB section had secured their importance among customers because of the
additional benefit service. They were treated as different section and hence enjoyed the
facilities of section (had a peon, a separate grade quota used to be allocated to them, they
could get promoted within their section, enjoyed small scale budget of their own) which was
difficult to relinquish. On the other hand they were habituated to carry out AB transactions,
now they had to learn to do other transactions (e.g. loan processing, cash deposits, payment
processing, schedule entries etc.) which created a learning anxiety among them.

The other restraining force was the inflexibility of the existing computer program. There were
separate modules for different sections and the computer department argued that when
system was being developed PAB was thought to always stay in the picture. Reporting
mechanisms were different, security arrangement and privilege assignments were different for
PAB sections and other sections. Hence it required many twists and modifications.

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Leadership and change management: A real organizational case

Theoretical Analysis

Type of change
The change did not aim to completely do away with the section. It however intended to take
away its major function and merge it with the services that were being provided by the main
sections at EPF. This change clearly is not a revolutionary change, just an evolutionary one. This
was part of organizational continuous improvement and is not a leap of any scale. When viewed
from strategic vs. operational change, this can be viewed upon from both perspectives. For EPF
at large the change is a strategic move though not very big in size. The strategy of EPF is to
continuously improve its service delivery, aiming at one window service system. From the
departmental perspective it is an operational change. They anticipate these kinds of change
over the course of organization’s life.

Analysis via Kurt Lewin’s model

Kurt Lewin’s model one of the most referred model. It describes any change in terms of three
phases and they are:

Unfreezing stage

In this stage the stability of organization is challenged. The rigid structure is shaken. Unfreeze
can take place in so many ways, however it aim is to bring turbulence, shake people and
practices, make change appealing. Thus unfreezing stage is the stage of developing readiness. It
involves creating a sense of urgency (Kotter’s eight phase model), educating employees to
behave differently; but the underlying notion is that the system must be “shaken up”, must be
confronted with a compelling need to do business differently.

At EPF, the unfreezing was initiated by holding meeting, asking managers to develop plans to
enhance service delivery and forcing managers to think how customer service can be made
efficient. In the annual conference of staffs, managers were asked to prepare papers on
enhancing services, the need for different service delivery units and the need for one window
service delivery mechanism. In many other occasions managers were compelled to come up
with proposals to make services customer friendly.

Changing stage

The results of unfreezing stage were overestimated and the management issued a circular to
merge “Additional Service” function with the core function of the sections. Top management’s
anticipation seemed myopic and at Contributor’s service department, the department chief
showed too much of haste to implement the system. His focus was on implementation rather

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Leadership and change management: A real organizational case

than meeting the core target. His shift of focus did not bring the result the circular had
expected. It would have been a massive blunder if the scale of change was larger because
change cannot be instigated overnight.

This myopia might be better explained with Kruger’s iceberg model of change. Managers only
considered the top of the iceberg: Cost, Quality and Time, hence they targeted only the issue.
They however ignored the immersed part of the iceberg that consisted of people’s perceptions
and beliefs and power and politics management.

Poor knowledge and understanding of technology played one of the major problems. They
assumed that simple tweaking in computer program will make things work the desired way
which proved to be wrong.

In the seminars and meetings the section chiefs had shown readiness to provide additional
service from their section itself;
however it was not the reality.
The tellers were already feeling
too much load of work and
addition of more responsibility
was interpreted as uncaring
attitude of the management.
Computer Department viewed
the issuance of circular without
any consultation with them as
ignoring them and
unnecessarily exerting pressure
on them.

The modifications in the

program were followed by
orientation cum training
programs for the tellers.

Refreezing

The new, changed condition or state needs to be reinforced, or undergirded, with a process and
infrastructure in place to maintain the new system. The department chief congratulated the
sections for being able to integrate the function of Additional benefit into the function of the
system. Completion of implementation was assumed to be the only success criteria. Changes in
computer programs were made to facilitate the tellers to provide their core services and
additional benefit service through single login.

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Leadership and change management: A real organizational case

Later some CRM trainings were conducted to reinforce that customer centric service delivery
mechanism was need of the time and whatever was done was done for the good of the
contributors and it glorified the image of the organization.

The freed staffs from PAB section were transferred to other sections to mitigate the workload
that would rise in the sections. Assurance of additional computers was also given.

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Leadership and change management: A real organizational case

Change Management
Change was abrupt and for contributor’s department it was not anticipated. The circular sent
from the head-office did not even provide a week for preparation, so change was forced. These
types of change are difficult to manage as they give no room for planning and preparing. The
people who looked after change were mere managers no leaders. Change encountered many
resistances.

Resource Management
When the circular was received a high level task force was immediately created to make
necessary preparation and study. Only two days was given to the task force which was later
extended for a week. During this period the members of the task force were relieved from
other responsibilities. The task force consisted of representatives from the contributor’s
department and computer department. It consisted of coordinator and few members.

Resistance
Resistance from computer department

The first and foremost effect of the circular was on the computer department. It was to make necessary
modifications in the existing programs to facilitate the merger of PAB’s Additional Benefit services to the
core services of the sections.

Computer department argued that when the program was developed, Additional Benefit
service was built as a separate module with separate vouchering and reporting mechanism. It
needed at-least a month to merge the vouchers with the vouchers that are printed at sections
for a single token to suffice for payment of both contribution and additional benefit.

It was also supposed to provide necessary trainings to the staffs and it was so much engaged in
other activities that trainings could not be arranged.

Moreover privilege assignment, security adjustment, module assignment were other major
concerns that needed some time.

Resistance from staffs in the section

In any workday a teller in the section has to handle around 50 transactions between 11:00 AM
to 2:00 PM. Customer’s always whined and pressed them for prompt service and efficiency.
They complained the computers were slow and they were sharing dot-matrix printers to print
vouchers which stretched the transaction processing time. In these scenarios they were already
under tremendous pressure and stress, they could not handle any more function. They also
claimed that because of too much of noise, pressure and system related deficiencies the rate of

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occurrence of errors had also raised and requiring them to carry out one more function will
only aggravate the situation.

They argued their sections were understaffed and underequipped there was no way for them
to add more responsibilities.

Resistance from the staffs at Pension and Additional Benefit Section

Most of the staffs had worked at PAB section for a long time (more than 5 years) and had an
average age of above forty. They were habituated to carry out one kind of transactions. On the
other hand their importance was also associated with what they were doing.
Contributors/Customers valued them because they were engaged in providing financial service
and this benefit scheme is usually not anticipated by the employees making it a pleasant
surprise to most of them. This gave them the sense of power which would no longer be with
them.

On the other hand, they didn’t know how other sections computer modules worked and how
much those modules were prone to error and their implications. This required them to learn
new things creating learning anxiety to them.

They could have also made their own groups and circle of friends that will now break.

The other important factor was that PAB was a full-fledged section with opportunities of
promotion within the section, separate grade quota and budget them.

Management of Resistance
When resistance surfaced, it was observed that the resistance from computer department was
the major one. There were frequent meetings between managers and department chiefs,
between department chiefs, department chiefs and system manager, department chiefs,
system managers and programmers. The desired modification was not possible within the given
time however the contributor department viewed this as lack of cooperation from computer
department making many situations highly heated, charged and confrontational.

Contributor services department chief used the pressure tactics. He pressed computer
department for immediate modification, when his pressure didn’t bring results, he asked the
central office to intervene. The Chief officer and the Administrator (General Manager) inquired
computer department about the situation asking it to do whatever was necessary.

At the end computer department proposed a middle of the road proposal, in which the
vouchers number would not be reduced and two tokens will still be provided to the customers.
However module privilege would be given to tellers at section and they won’t be required to

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use two login for payment processing and additional benefit processing. Realizing the gravity of
the situation, the proposal was accepted with conditions of improvement in future.

For employee level resistance, the managers held meeting with the officers who in turn held
meetings with teller and junior staffs assuring them that the “darbandi” (positions) of tellers
and junior staffs will be increased. For the mean time the staffs freed at PAB section will be
brought in to the sections. They also assured that negotiations were going on with computer
departments and central office to add more computers, provide faster and efficient printers.
They were also assured that the department will protect them from possible errors the
responsibility to look upon which was given to the section chiefs.

For employees at PAB the change was more painful as they were very few in number. They
were however given trainings so that they could carry out transactions of other sections as well,
other psychological factors were not considered.

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Role of leadership
The change was operational (from perspective of Contributor’s Department) and was not a
huge one or a transformational kind of change but it demanded leadership and commitment.
The parameters of success were poorly defined and it was interpreted that implementation was
the criteria of success. The change did not have a leadership and the department chiefs of both
computer department and contributor’s department played role of manager not of a leader.

The leadership played little role to facilitate change. The leadership at Central Office only
dictated change while leadership at the Thamel branch tried to implement change with the
pressure tactics.

Legitimizing role: Since the circular signed by the administrator made rounds at various sections
and departments. It was obviously a legitimate change.

Energizing role: Management at the Thamel branch assured additional resources would be
provided and the staffs that were now redundant at the PAB section would be transferred to
their section to minimize the burden of work overload. The staffs were also provided trainings
however more pressure than energy was poured into the work environment.

Communicating role: There was a certain communication gap and change was dictated through
circular without asking the concerned department and sections to make preparations. Even
when circular made rounds, the staffs (tellers) only knew about the new change via grapevines
and hearsay. There was very little communication between the central office and the Thamel
branch regarding the change. Central office took it for granted that the change has took place
on the date specified while in reality it took 3 weeks when sections started carrying out AB
transactions.

Gatekeeping role: The gatekeeping role should have been played by the central office to co-
ordinate the transition phase. Even when there were situations of confrontation between
Computer Department and Contributor’s Department, central office stayed away from the
scene. At the other end since the scale of change was not large, there was little gatekeeping
role required.

Strategies
Whether there was any strategy to implement change is debatable but during the
implementation phase two strategies were hinted:

Power strategy: It was the major strategy. The belief at EPF is that anything that is decided at
central office must be implemented otherwise there could be undesirable consequences. This

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suppressed concerns of staffs/section chiefs and even managers about the problem they saw
during implementation. Constant nagging by the managers during the implementation period
was also cohesive.

Normative: The staffs were given trainings on Customer Relationship Management, an internal
seminar on CRM was also organized trying to justify the need for change.

However the sequence of strategy was wrong. Power strategy should not have preceded
Normative strategy. Staffs should have been educated first and even after that if they had
resisted cohesion could have been used.

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Evaluation of Change
Change cannot be evaluated unless its parameters of success are gauzed. When decision was
made to merge the functionality of PAB section with the core sections, board had made implicit
assumptions that apart from reducing the response time and enhancing customer satisfaction,
the change would also reduce papers/vouchers that these transactions produced and issuance
of single token would suffice for payment. The leadership at Thamel considered
implementation was the major criteria of success and they pressed for immediate
implementation. The focus was shifted from successful change to successful implementation.
The change couldn’t take place on the same day the circular had expected, it was implemented
after three weeks that included frequent meetings, brainstorming, confrontation leading to the
modifications being made in computer programs. However the system still produces same
number of vouchers and customers still have to carry two tokens one for contribution payment
and the other for additional benefit.

There are more transaction related errors than before and many of these errors have financial
implications. If customer’s satisfaction and service delivery had been the only objective, EPF has
been successful however under other parameters the success is partial. Even in customer’s
satisfaction front there has been full success as due to errors customers have to move to and
fro between cash section and their respective sections.

No motivation was given. The change requirement and process was not communicated
properly.

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Conclusion and recommendations

The change has been partially successful and the modifications made in computer programs
have not been sufficient. Frequency of occurrence of errors has increased, number of vouchers
has not been reduced and still customers have to carry two tokens. On the other hand the
reconciliation process has become faster, at least one person has been provided to section, and
trainings have been provided. Change has not been documented. The pressure tactics used by
the leadership at contributors service department has sped the implementation but also
provided no room for testing, required modifications was not done.

The change has been forced in the sense that without asking the concerned departments to
make necessary changes. Information was only sought from section chiefs and their opinion
seemed to differ from what their staffs had to say. The section chiefs should have been
encouraged to gather opinions and information from their staffs because it is staffs that will
have to ultimately accept the change to make it successful. At the end we would like to make
following recommendations

 Gauze the employee readiness to change at all levels (not only at levels of section chiefs)
 Provide more efforts to unfreeze the status quo
 Do not force change
 Communicate the need for change frequently and convincingly
 Clearly state the parameters of success
 Provide ample time for management and preparation of change
 Document the process of change management and lessons learned
 Provide motivation and incentive to the supporters of change

The central office should provide trainings to the managers on change management. They have
so far been trying to deal with change like with any other operational activity. This has led to
dissatisfaction among staffs.

As the ADKAR model suggests Awareness, Desire, Knowledge, Ability and Reinforcement should
be focused. Awareness by letting employees know why change is necessary, desire by arousing
them to participate in change, imparting knowledge to them on implementation, develop their
ability through trainings/seminars/conferences and reinforce the positive learning and
behavior.

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