Change Management

Assessment 2 Assessment Type: Case Study - Individual Assessment 2500 + 10% word report. Purpose: This assessment is designed to allow students to apply theory and models of change management and sustainability to a given scenario, identifying the issues and proposing supported recommendations to resolve the ssues. This assessment relates to learning outcomes a, b and c. Value: 30% Due Date: Week 10 - 5.00pm Monday Submission: Upload a soft copy - Word .doc or .docx - to Turnitin via KOI's Moodle subject homepage Task details: Case study Equitable Life: creating chaos out of order A good case of chaos emerging out of order is shown by the Equitable Life Assurance Society. For 200 years Equitable was a 'safe pair of hands' looking after life insurance and pensions, typically for society's professionals - doctors, engineers, teachers and managers. However, in the years before 1988 it sold policies to some investors that guaranteed the pay- out of certain benefits. Time passed and interest rates rose and fell. A situation built up in which Equitable did not have enough money to keep paying out to those to whom it had guaranteed returns. Realizing this, Equitable tried to stop paying out the rates it had guaranteed. But people with the guaranteed return policies wanted their money. Legal action was taken, ending up in the House of Lords where the Law Lords ruled that the policies had to be honoured. But where could Equitable find the money to honour its promises? Its answer was to take money from its policyholders who did not have guaranteed return policies and give it to those with guarantees. The Lords' decision caused Equitable to close to new business - not that anyone in their right mindDiagnosing change situations 59 would have taken out a new policy with them. Most of its policyholders were worried about their investments and many looked to transfer their policies to a secure institution. Equitable's 200-year-old world collapsed and along with it the well-being of thousands of policyholders. Investors who decided to transfer their money out to another investment company saw the value of their policies reduced by transfer penalties. Even so, many investors cut their losses and transferred to what they hoped would be a safer investment company. The Lords' decision forced Equitable to seek a buyer, but with a $1.5 billion gap in MGT301 CHANGE MANAGEMENT T222 07/07/2022 14:31 PAGE 9 OF 15 AUSTRALIAN INSTITUTE OF BUSINESS AND MANAGEMENT PTY LTD ABN: 72 132 629 979 CRICOS 031714 MGT301 K >KOI its funds it was not an attractive proposition. The point of this case is to illustrate how ongoing operations that seemed quite acceptable, even very desirable, built up an organizational time bomb that one day exploded. The events central to this case appear to be traceable to decisions taken by 'top' managers under the influence of environmental forces. That said, if the Law Lords had come to a different decision then perhaps Equitable and thousands of its customers would have avoided so big a crisis. Thus, some environmental 'throw of the dice' was at play. We can also see how warning signs and signals were ignored. Before the turmoil, the Treasury had realized that Equitable would be insolvent if it had to find cash to meet its guarantees (Senior, 2001). Furthermore, the true poor performance of Equitable was an open secret in financial circles, yet it continued to pay out relatively high bonuses (and so top the league tables) in preference to putting aside funds that could be used when markets were less prosperous (Miles, 2000). The Board, in what seems to be a rather pathetic action, thought about suing former executives, financial advisors and auditors. Q1. Refer to the section on 'environmental turbulence' in Chapter 1. Which (one or more) of the five levels of environmental turbulence do you think fits the situation Equitable Life found itself in? Q2. What type(s) of change was Equitable Life pushed into? Do you agree or disagree with the changes the organisation made? Q3. What recommendations would you make to have improve the situation at the organisation? Senior, Barbara, et al. Organizational Change PDF EBook, Pearson Education, Limited, 2020. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/kingsowninst- ebooks/detail.action?docID=6130630. Created from kingsowninst-ebooks on 2022-06-01 09:18:05. Students need to format their research, analysis and conclusions into a professionally presented report that has the following items: Title page o Executive summary Table of contents o Appropriate headings and sub-headings Recommendations 0 Reference list (Harvard - Anglia style) o Attachments if relevant The report's headings must be properly numbered. Furthermore, the report must be 1.5 spaced and written in either Times New Roman 12pt, Calibri 11pt or Arial 10pt. Students must support their analysis with reference from the text and a minimum of eight (8) suitable, reliable, current and academically acceptable academic sources. Please ask your tutor if you are unsure about the academic sources that are considered valid. Groups seeking credit or above grades should support their analysis with increased number of reference sources comparable to the grade they are seeking. Completed assessments must be uploaded as a word document by using the relevant link in the subject's Moodle page. The following criteria will be used to mark the assessment: Analysis 30% Research - extent and application 30% Recommendations/conclusions 20% Presentation 20%