University college of commerce and

Business management
TITLE:
MANAGING CHANGE: A CASE STUDY
ON
MICRO-FINANCES INDUSTRY
NAME OF THE CANDIDATE:
N.PRATHIBA
NAME OF THE SUPERVIOR:
DR.MOHAMMED ABDUL AZEEM
MBA, PHD
Professor:

DEPARTMENT OF MANAGEMENT AND

COMMERCE
MAULANA AZAD NATIONAL URDU
UNIVERSITY

ABSTRACT
Change management experts have emphasized the importance of establishing
organizational readiness for change and recommended various strategies for creating
it. Although the advice seems reasonable, the scientific basis for it is limited. Unlike
individual readiness for change, organizational readiness for change has not been
subject to extensive theoretical development or empirical study. In this article, I
conceptually define organizational readiness for change and develop a theory of its
determinants and outcomes. I focus on the organizational level of analysis because
many promising approaches to improving healthcare delivery entail collective
behavior change in the form of systems redesign--that is, multiple, simultaneous
changes in staffing, work flow, decision making, communication, and reward systems.

Discussion
Organizational readiness for change is a multi-level, multi-faceted construct.
As an organization-level construct, readiness for change refers to organizational
members' shared resolve to implement a change (change commitment) and shared
belief in their collective capability to do so (change efficacy). Organizational
readiness for change varies as a function of how much organizational members value
the change and how favorably they appraise three key determinants of implementation
capability: task demands, resource availability, and situational factors. When
organizational readiness for change is high, organizational members are more likely to
initiate change, exert greater effort, exhibit greater persistence, and display more
cooperative behavior. The result is more effective implementation.

Summary
The theory described in this article treats organizational readiness as a shared
psychological state in which organizational members feel committed to implementing
an organizational change and confident in their collective abilities to do so. This way
of thinking about organizational readiness is best suited for examining organizational
changes where collective behavior change is necessary in order to effectively
implement the change and, in some instances, for the change to produce anticipated
benefits. Testing the theory would require further measurement development and

careful sampling decisions. The theory offers a means of reconciling the structural and
psychological views of organizational readiness found in the literature. Further, the
theory suggests the possibility that the strategies that change management experts
recommend are equifinal. That is, there is no 'one best way' to increase organizational
readiness for change.

ABOUT THE COMPANY (SKS MICRO FINANCES)

SKS Microfinance Limited (SKS) is a non-banking finance company (NBFC),

regulated by the Reserve Bank of India. SKS' mission is to provide financial
services to the poor under the premise that providing financial services to poor
borrowers helps to alleviate poverty. The company operates across 19 of 28
Indian states. SKS was founded in 1997 by Vikram Aula, who has served as its
executive chair until November 2011.

Type

NBFC

Industry

Finance

Founded

1998

Headquarters

Hyderabad, India

Area served

India

Key people

M R Rao CEO- Managing director

Number of employees

over 20000

Website

http://www.sksindia.com/

History
On 28 July 2010, SKS Microfinance debuted on the Bombay Stock Exchange.
Muhammad Yunus expressed concern that going public would put the demands of
shareholders ahead of the poor. He added further, "If they do it, I cannot stop them but
I would encourage genuine Micro credit programs." However, the differing legal
frameworks in Bangladesh and India could justify SKS Microfinance's IPO initiative.
Yunus's Grameen Bank inBangladesh is funded primarily by deposits raised from its
own borrowers and non-members, whereas Indian MFIs are prohibited by law from
collecting deposits.
SKS founder Vikram Akula resigned from the board on 23 November 2011.
PH Ravikumar, an independent director and former chief executive officer of NCDEX

took over as the interim non-executive chairman of the only listed microfinance
institution.

Controversies
In 2012, an independent investigation commissioned by the company linked
SKS employees to at least seven suicides of creditors in Andhra Pradesh. A second
investigation said SKS may have been involved in two other suicide cases. In 2012,
SKS Microfinance cut 1200 jobs and closed 78 branches in Andra Pradesh.Interviews
with family members of the deceased, by BBC suggested that the reason for these
suicides appeared to be large sub-prime loans taken by the villagers, with the active
encouragement of SKS loan agents.

Products
SKS Microfinance offers 8 financial products and services to its clients Income Generation Loans, Mid-Term Loans, Mobile Loans, Sangam Store Loans,
Housing Loans, Funeral Assistance, Gold Loan, and Life Insurance. The company
lists some of the social benefits of its financial product and service offerings as
"providing self-employed women financial assistance to support their business
enterprises, such as raising livestock, running local retail shops called kirana stores,
providing tailoring and other assorted trade and services."

Operations
SKS Microfinance follows the Joint Liability Group (JLG) model. The
methodology involves lending to individual women, using five member groups as
the ultimate guarantor for each member. Through group lending, situations of adverse
selection and moral hazard due to asymmetric information are better managed.
"Social collateral" replaces asset collateral (which is lacking in the poorer segments of
society). Such a system works because India is still a highly community-centric
society. The concept of honour and respect within society is deeply rooted in Indian
culture and willful default invites condescending glances, humiliation and even
ostracism.

OBJECTIVES OF THE STUDY

22 Change Management Objectives
Leadership is change leadership. Stay-the-same leadership doesn't exist.
Organizational change management is the leadership of large changes at the
organizational level.
The primary objective of organizational change management is to execute
strategy. That's easier to say than do. The following objectives (goals) are how
organizations deliver change.

1.

Establish a Culture of Innovation

If your culture is in the habit of resisting change every change will be difficult.
Establishing a culture that's creative and accepting of change is a high priority
objective for every change management practice.

2.

Establish Principles for Change

Change management principles are the lifeblood of your innovation culture. They
set expectations to everyone in your organization we aggressively innovate and
change.

3.

Develop Innovative Strategies

Change management is a strategy game. Develop and implement strong culture,
communication and performance management strategies.

4.

Establish Best Practices for Innovation

Develop best practices for tactical change management.

5.

Develop Change Leaders

Change is a leadership activity at every level of your organization. Develop your
leaders of change.

6.

Empower Agents of Change

Delegate sufficient authority to leaders of change and support them.

7.

Identify Change Accountability & Responsibility

Set clear expectations for change accountability & responsibilities.

8.

Align Employee Objectives to Change

Plan to measure all employees according to change objectives. Set performance
expectations with every employee and invite commitment.

9.

Communicate & Socialize Change

Communication & socialization of change is critical to reducing resistance to
change.

10.

Address Concerns and Improve Change

Socialize change with a genuine intention to improve it. Address employee
concerns and act on valuable feedback.

11.

Apply Knowledge to Change

Knowledge underpins all change. Ensure that knowledge is leveraged and
improved.

12.

Train Employees to Prepare Them For Change

Training reduces change execution problems and improves acceptance of change.

13.

Achieve Employee Participation In Change

It's not enough to give employees objectives to support change. Change
management seeks employee engagement. Deploy strategies to energize your
organization around change.

14.

Create a Sense of Urgency For Change

Build empathy in your people for the change. Communicate to ensure employees
are aware of the external forces (e.g. competition) that make change an urgent
need.

15.

Maintain Change Momentum

Too often changes start on a high note and then lose momentum. Keep employees
informed and engaged on a daily basis.

16.

Recognize & Celebrate Change Milestones

Celebrate small victories to maintain change velocity.

17.

Manage Performance
Change management actively aligns with performance management.

18.

Reward Agents of Change

Establish incentives for the agents of change early on. Reward results.

19.

Gain Acceptance of Change

Launch the change and gain acceptance.

20.

Learn From Change

Use your failures and successes to build organizational knowledge.

21.

Measure Change Results

Measure the business results of change.

22.

Sustain Change
Change is a long term, sustainable strategy.

CHANGE MANAGEMENT
WHAT IS CHANGE:
INTRODUCTION
Most people are, in the full of excitement and without rest world that we
currently live in, subject to some form of change affecting their lives. Whether it be a
change in policies, frequent restructuring of the health system, the appointment of
new ministers, or even a new pet dog, they are all forms of change that mankind has
to deal with. Some persons deal very well with change and thus adapt quickly to any
new situation. Others that fear of unknown or fear that they do not have the skills they
will need if changes are implemented, do not find this easy at all, and therefore resist
any changing situation that might occur. The object of this management assignment is
to help identify the reasons for resistance to change, how to overcome the resistance.
Once one understands more about change, the easier it is to adapt.
Reasons for resistance to change:

Uncertainty about the causes and effects of change

People may worry that their work and lives may be affected, and feel
threatened and manipulated, or losing some of their power. They may take
action to prevent the change happening.

Unwillingness to give up existing benefits or self-interest

Although the change may benefit the organization as a whole, some

individuals may lose power, status or benefits in some way. The amount of
resistance generated will depend on the amount that the group or the
individual feel will affect self-interest.

Awareness of weaknesses in the changes proposed

People may resist change if they are aware of potential problems that may
have been overlooked by the change initiators.

Lack of trust and understanding

If one does not understand the change or reason thereof, how can one accepted
it. Lack of trust between employees and managers will also create a barrier to
the change.

Low tolerance for change

Some individuals have greater intolerance to adapt to new situations. Some are
likely to resist change just because it is change, regardless of their personal
situation. Individuals who are tolerant to change but are continuously
subjected to it, may reached the limit of their tolerance.

Peer pressure

Normally occurs within groups. If the group is highly cohesive, even

reasonable changes will be met by resistance. For example: Unions.

Different assessments
People have different perceptions. A good idea for one might be a bad idea for
another. Different people in different jobs will have different perceptions of a
situation.

Conservatism
Organisation or people may simply be opposed to change. This can result from
a feeling that everything is OK, from loss of touch with customers, from lack of
exposure to better way of doing things, or from slowness of decision making, etc
Organisational resistance
Resistance to change is usually by individuals, but the nature of the
organisation can also cause resistance. Organisation with a tall rigid hierarchical
structure with well-defined specification of rolls will find it harder to accommodate
change than a more flexible structure.
Complexity can also be a problem-Complex changes are more difficult to
implement.
According to Peter Drucker in his 1999 book Management Challenges for
the 21st century, Everybody has accepted by now that change is unavoidable in a
period of upheaval, such as the one we are living in, change is the norm. he writes
( Peter Drucker.1999). Organisations that survive in a period of rapid structure change
are the change leaders/strong organisations. An organisation may need various
strategies and approaches to overcome resistance to change. Change creates
uncertainty. There are two types of change, revolutionary and evolutionary.
Revolutionary change takes much less time than evolutionary, but it does not
give the organisation and its individuals time to learn and respond to the new changes.
However, evolutionary change may allow the organisation and its employees enough
time to accept that their future role within would have to change. Change is a painful
experience for many. To make change work effectively, the CEOs and managers must
to be sensitive to the impact of change on people. There are a few methods of
overcoming resistance to change:

Education and communication

The leaders develop and communicate a clear image of the future state can
help individuals, groups and even entire organisations to accept the change. It is
almost impossible to manage the condition to another if people have no idea where
changes are headed. The fact is that many organisations go into the process of change
with some basic things that they hope to achieve and cherish value to guide them on
their journey. It allows leaders to be flexible creative and open-minded in deciding a
future path; but for the individuals it can be frightening. So it is important to explain
the future state as fully as you can.
Successful leaders have to spend a big amount of time to meet people one-onone or in small sessions. They can even use video taped massages to pass on to
individuals or groups. To communicate directly to the change leader for example
Scott MacNealy at Sun Microsystems says he gets more than two hundred internal
electronic massages a day during the implementation of change . He knows the
employees think. He puts information on companys websites and employees can
gather news on the company Internet. This method will get people to help
implementing the change once they are persuaded. However, it can be very time
consuming if many people are involved.
Having an intensive discovery session, with an environment of open
communication, creativity and freedom from distractions, will enable a clear outline
of where the organisationis now, what are its objectives, and where are the gaps. This
initial session will then help to make a better understanding position for both parties.

Participation and involvement

By getting more people involve in the planning stage, the more successful the
change will be. As people participate they develop a sense of ownership. For example,
The Avionics Group was facing decentralization problems, uncoordinated processes
and few common measures. Therefore, the group feels the need to deliver its One
Company vision by focusing on technology, people and processes by consulting
KPMG Consulting. The firm worked with Avionics employees, with more
responsibility devolving to the employees over time . They feel responsible to get the

things work rather than to oppose it. Furthermore, participants may have some good
idea to contribute. They may build understanding and are much more likely to truly
hear important message. Especially, if the leaders can get the potential resistor to help
in implementing the change, they will have a sense of accomplishment from making it
work. As people who participate will commit to the change and give any relevant
information they know putting into the change plan. However, it can also be very time
consuming if participants design an irrelevance change. And the change leaders have
to figure out which information is relevant to the change.

1.

Insecurity:
For people working in a comfortable environment for quite some time, a change
of environment often brings about uncertainty and people no longer know exactly
what to expect from the implementation of change. A sense of insecurity prevails
in people who are subjected to change from one environment to another. For
example, when a person moves from high school to college, or from one job in a
city to another job in another city, a sense of insecurity may occur.

2.

Possible social loss:

Change has a potential to bring about social loss. The informal work group may
be extremely strong. If a change causes an individual to be transferred, the power
of the group is likely to be diminished. The individual who is transferred gets

affected as he or she loses the association with the other members of the group.
This loss is referred to as social loss
3.

Economic losses:
New technology may enable a firm to produce the same amount with fewer
employees. Even though some of the employees rendered surplus in some
department because of automation, may be redeployed and retained, some other
workers may suffer an economic loss.

4.

Inconvenience:
Even when a change is not associated with a social or economic loss, new
procedure and techniques may have to be learnt. Physical and mental energy need
to be expended and some may not like the same.

5.

Resentment of control:
When employees are told that a change is to take place, they are made to realise
that they do not have any other option other than implementing the change. This
may create some resentment that employees may not have any control over their
destiny. Even though the change may be for better, they are likely to resent the
change. For example, if the management makes it compulsory for the employees
to wear uniform, then such change may be resented because the employees feel
that they do not have any other choice but to wear uniform.

6.

Unanticipated repercussions:
Because the organisation is a system, a change in one department or division is
likely to have unforeseen repercussions in another. For example, a newly designed
job may require a change in supervisory behaviour and supervisors may resist this
change even if they initially supported the concept of job enrichment by
redesigning the jobs.

7.

Threats to influence:
When a change is likely to reduce the power base of a group, department or
division, even if it is good for the organisation as a whole, it is likely to meet
resistance of employees concerned with the change.

REFERENCES
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2. Jonathan Murdoch, "The Microfinance Promise,"
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4. ABCNews, SKS Launches India's First Microfinance IPO
5. Microfinance Focus, "Microfinance pioneer Prof Yunus raises concern over
SKS IPO,"
6. Microfinance Focus, "Exclusive: SKS Microfinance journey to IPO An
inside story,"
7. "SKS will miss Akula; to raise funds via QIP in FY12 - CNBC-TV18".
Moneycontrol.com. Retrieved 2012-07-17.
8. Kinetz, Erika. "AP IMPACT: Indian lender SKS' own probe links it to
borrower suicides, despite company denials". Associated Press Business
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2012-07-17.
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