The Effects of Change Management Practices on Organizational Performance: the Case of Commercial Bank of Ethiopia, Addis Ababa

The Effects of Change Management Practices on Organizational Performance: The Case of Commercial Bank of Ethiopia, Addis Ababa

MA. Thesis

Mihereteselassie Birhanu

October, 2015 ARBA MINCH, ETHIOPIA

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFORMANCE: THE CASE OF COMMERCIAL BANK OF ETHIOPIA, ADDIS ABABA

Mihereteselassie Birhanu

A THESIS SUBMITTED TO THE DEPARTMENT OF MANAGEMENT, INSTITUTE OF BUSINESS AND ECONOMICS, SCHOOL OF GRADUATE STUDIES

ARBA MINCH UNIVERSITY

IN PARTIAL FULL FILLMENT OF THE REQUIREMENTS OF THE

DEGREE OF MASTERS OF ART IN BUSINESS ADMINSTRATION

OCTOBER, 2015 ARBA MINCH

DECLARATION

I hereby declare that this MA thesis is my original work and has not been presented for a degree in any other university, and all sources of material used for this thesis have been duly acknowledged.

Name: Mihereteselassie Birhanu

Signature: ______

Date: ______

SCHOOL OF GRADUATE STUDIES

ARBA MINCH UNIVERSITY

ADVISORS’ THESIS SUBMISSION APPROVAL SHEET

This is to certify that the thesis entitled“ the effects of change management practices on organizational performance the case of commercial bank of Ethiopia, Addis Ababa,” submitted in partial fulfillment of the requirements for the degree of Master’s with specialization in Business |Administration , the Graduate Program of the Department of Management, and has been carried out by _Mihereteselassie Birhanu Id. No RMA/015/06, under my supervision. Therefore I recommend that the student has fulfilled the requirements and hence hereby can submit the thesis to the department for defense.

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Principal Advisor Signature Date

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TABLE OF CONTENT

CONTENTS PAGE

List of Tables ...... iv

List of Figures ...... v

Abstract ...... vii

CHAPTER ONE ...... 1

Introduction ...... 1

1.1. Background of the Study ...... 1

1.2. Statement of the Problem ...... 4

1.3. Objectives of the study...... 4

1.4. Research Question ...... 5

1.5. Hypothesis...... 5

1.6. Significance of the study ...... 5

1.7. Scope of the study ...... 6

1.8. Definition of Terms...... 6

CHAPTER TWO ...... 8

REVIEW OF RELATED LITERATURES ...... 8

2.1. Introduction ...... 8

2.2. Meanings and concepts of change ...... 8

2.3. Models for Understanding and Approaching change ...... 10

2.4. Challenges of Change ...... 14

2.5. Practices of Managing Changes ...... 14

2.6. The effects of change management Practices on the performance of an organization ...... 18

2.7. Organizational Culture and Employees’ motivation; Factors that affect Organizational Performance ...... 19

2.8. Empirical Literature Review ...... 20

CHAPTER THREE ...... 23

RESEARCH DESIGN AND METHODOLOGY ...... 23

3.1. Design of the study ...... 23

3.2. Population and Sampling ...... 23

3.3. The pilot study ...... 26

3.4. Data Collection Instruments ...... 26

3.5. Conceptual Framework ...... 27

3.6. Validity and Reliability ...... 29

3.7. Data Collection Procedure ...... 29

3.8. Method of data analysis ...... 30

3.9. Data Compilation and Coding ...... 30

Chapter Four ...... 31

Data Analysis and Interpretation ...... 31

4.1. Normality of the Raw Data ...... 31

4.2. Demographic information of participants of the study ...... 32

4.3. Analysis of Biographical Data ...... 33

4.4. Correlation Analysis of the Variables in the Study ...... 34

4.5. Change Management Practice and Organizational Performance ...... 35

4.6. Multiple regression ...... 36

4.7. Causal Relationship of the Variables Treated in the Study ...... 39

CHAPTER FIVE ...... 44

SUMMARY, CONCLUSION AND RECOMMENDATION ...... 44

5.1. Summary of the Study and Overview of Significant Findings ...... 44

5.3. Conclusions ...... 46

5.3. Recommendations ...... 47

References ...... 48

iii

LIST OF TABLES TABLES PAGE

Table 1 : number of branches and employees in each district ...... 24

Table 2 Sample branches selected from the four districts ...... 25

Table 3: Reliability of the Instrument ...... 29

Table 4: Descriptive statistics of the variables treated in the study ...... 32

Table 5: participants’ biographical information ...... 33

Table 6: Pearson correlation for the variables treated in the study ...... 34

Table 7: Regression analysis for organizational performance and components of variables ...... 37

Table 8: the new regression analysis for organizational performance and components of variables ...... 38

Table 9: Decomposition effect from the path analysis ...... 41

Table 10: Direct, indirect and total effect of each predictor variable on the criterion variable ... 42

LIST OF FIGURES

FIGURES PAGE

Figure 1 The initial path model for organizational performance ------28

Figure 2: Participants of the study ------32

Figure 3: A path model, portraying causal relationship of gender, change management practice, employees motivation, organizational culture and organizational performance ------40

Figure 4: the final path model for organizational performance ------43

LIST OF APPENDICES

APPENDICES PAGE

Appendix 1 List of Districts and branches included ...... 54 Appendix 2 Approval letter from the Human Resource Department of CBE ...... 59 Appendix 3 ...... 60 Appendix 4 Questionnaire ...... 61

Abstract The purpose of this study was to investigate the effect of change management practices on performance of an organization as well as the relationship between gender, employees’ motivation & organizational culture and their effect on the overall performance of an organization by focusing on Commercial Bank of Ethiopia, particularly in Addis Ababa. The study was conducted on 12 randomly selected branches of Commercial Bank of Ethiopia. The study was conducted on 265 employees including top level managers. To accomplish the goal of this study, a quantitative survey design was adapted and a path analysis model was used to investigate the direct and indirect effect of each predictor variable on the criterion variable. Since all variables were approximately normally distributed, to undergo the data analysis parametric tests were used. The finding revealed that gender has no relationship with any of the variables of the study except with organizational performance. Moreover, a strong positive correlation was obtained between change management practice, employees’ motivation and organizational culture. Though the effect size was small or typical, the result of the study shows the existence of positive correlation between change management practice and organizational performance (r = 0.296, p<0.05). On the other hand, the result of multiple regression analysis shows that the combined effect of augmented change management practices and gender to be 18.3% of the total variability of organizational performance. The result of path analysis shows that organizational culture has strongest direct effect on the performance of the organization than did any of the variables in the study. The effect of change management practice on organizational performance was more direct than indirect; the same is true for gender. Based on the findings of this study imperative recommendation for practice and future research was provided.

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THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

CHAPTER ONE

Introduction

1.1. Background of the Study

In every country commercial banks are the main economic institutions that facilitate the financial growth and economic development mainly serving the key purposes of providing financial intermediation and transaction services. In providing these services to its customers, Commercial Bank of Ethiopia has undergone a lot of changes starting from its establishment, 1942. Banking industry is more vulnerable to instability relative to other industries, owing to the existence of short term liability versus long term assets and the presence of highly leveraged firms and banks that have an incentive to engage in risky behavior (Northcott, 2004, as cited in Zerayehu, Kagnew & Teshome, 2013).

This instability in the industry forces for a change to happen with a different circumstances and every change is initially planned to improve the performance of the organization by altering how work is done. Creasey (2009) stated that when you introduce a change to the organization, you are ultimately going to impact how the organization operates: processes, Systems, Organization structure and job roles. Different companies perform different activities to reach at the pick stage of success. Even though many organizations are compelled to make changes in order to survive, many of those organizations face difficulties in adapting to changes in the uncertain world of economy (Varun& William, 1997). If the change is going to be managed effectively the operation of the organization can be enhanced and the overall performance of the organization increases (Paton and McCalman, 2000). Managing change effectively can create a huge value for the organization and knowing how to manage change can become a requirement for a given occupation.

Change management is a set of basic tools or structures intended to keep any change effort under control (Kotter, 1995). Managing changes include creating a sense of urgency to reinforce the need for change, providing people with facts, figures and evidence to persuade them for change, selecting the right people to form the guiding coalition, getting the guiding coalition to work

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 together as a team, creating clear and tangible vision for change, constructing effective strategies to deliver the vision, changing systems that get on the way of the changed vision, recruiting promote and develop the right people to promote change and ensuring the right people are chosen (Hemamalini, 2001). Organizations are in constant evolution and the pace of change is accelerating. As a result the ability to introduce organizational change has become a strategic imperative. Organizations, to successfully implement the change management program, has to achieve the desired objectives and improve the performance of an organization through different change management practices; address the human side systematically, involving every one, communicating the vision, ensuring commitment from within, creating a clear and tangible vision for change, minimizing resistances to change and selecting the right people to guiding alliance (D. Wilson, 2010).

Change Management requires leadership to set direction, project management to take care of technical aspects of change, and people to implement the change. There are four key areas: determine need for change, prepare and plan for change, execute the change; and sustain the change that need to be addressed in managing changes. Change management is a necessary tool for organizations to survive for a long time like companies in US that survived for more than 100 years. (Tony, 2012)

The underlying basis of change management is that people’s capacity to change can be influenced by how change is presented to them. Their capacity to adapt to change can shrink if they misunderstand or resist the change, causing barriers and ongoing issues. The rationale is that if people understand the benefits of change, they are more likely to participate in the change and see that it is successfully carried out, which in turn means minimal disruption to the organization. (Queensland, 2007)

Commercial banks are financial institutions that serve the general public in any society by rendering different services to its customers as they require. These commercial banks highly participate in the growth and development of a given country by lending money in many sectors of the economy, contributing to investments, employment creation and by increasing the process of economic growth. Commercial Bank of Ethiopia is one of the leading commercial bank in the country and pioneer in introducing modern banking in the country. Since change is inevitable CBE has to respond to different pressures requiring change so that its effort will truly set it

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 differently from its competitors. Becoming a world class commercial bank in 2025 (vision of CBE) requires the company to undertake different changes i.e., structural, technological and individual changes so that the vision will be achieved by a great performance of the organization. Paton and McCalman, (2000) argues that each change has consequences and implies something and one of the most important result of every process of change is making a positive change in performance. More importantly, the performance of the organization can also highly be affected by the way in which change management is undergone. Therefore organizations have to engage with reaching the needed operational objectives so as to improve the overall performance of an organization.

Performance of an organization can be defined as the organizational effectiveness of activity results in terms of financial and non-financial measures like turnover, profit margin customer service delivery, etc (Kennerley and Neely, 2003). Our understanding of performance in organizations has undergone large-scale changes as our understanding of organizational complexity has grown (Mary, 2006). As argued by André (2007) high performance of an organization can be characterized by achieving sustainable growth that is better than the performance of its competitors over a period of at least five years & having a great ability to adapt quickly to changes. Jinjiri & Bello (2013) cited that Nightingale and Poll (2000) argued that the study of change management in service industry is less than the needed amount despite the importance of service sector in terms of employment generations and product/service innovation. These authors also argue that there is a lack of literature on implementation of change management in the banking sector. Since there is also lack of literature in our country this study will therefore provide insights on the effects change management practices in the performance banking sector organizations, specifically CBE in Addis Aaba.

Other than the change management, the performance of an organization can also be affected by factors like organizational strategy information technology, leadership, innovation & development, employees, quality, corporate governance, clients, suppliers, business uncertainty, structure, performance measurement, employees’ motivation and job security (Gavera, Ilies, & Stegerean, 2011). Specifically under this study, factors that influence organizational performance will be: organizational culture and employees’ motivation since the researcher believes these variables will mostly determine the performance of an organization.

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

1.2. Statement of the Problem

Management of change is an important aspect for the development and growth of an organization. There will be no doubt that successfully dealing with change can result a positive forward movement to the organization. But in reality as stated by Song (2009) the unsuccessful number of the change management process is higher when we compare it to the successful one. Since organizational change by itself is a complicated activity, any minor mistakes in the change management process could result in the failure of the overall organizational change (Song, 2009).

The implications of change management processes are regularly under-estimated by senior management and not managed adequately (Samuel, 2013).The failure in the change management program results in a huge crisis for the organization in terms of competitiveness, a decrease in profitability, a decline in employees’ motivation and high turnover, which intern results in losses of respected and loyal customers. As a consequence the survival of the organization will be putted in danger.

1.3. Objectives of the study

The purpose of this study was to investigate the effects of change management practices on performance of an organization as well as the relationship between gender, employees’ motivation & the organizational culture and their effect on the overall performance of an organization by focusing on Commercial Bank of Ethiopia particularly in Addis Ababa city administration. Hence, this study was directed towards addressing the following objectives:

To determine the effects of change management practices on the overall performance of CBE. To investigate the effects of employees motivation and organizational culture on the performance of CBE. To investigate the direct and indirect effect of change management practices on the overall performance of CBE. To investigate the relationship between change management practices and the overall performance of CBE

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

1.4. Research Question

Based on the objectives stated above the following questions were addressed.

 What is the effect of change management practices on the overall performance of CBE?  What is the effect of employees’ motivation and organizational culture on the performance of CBE?  What is the direct and indirect effect of change management practice on the overall performance of CBE?  Is there a statistically significant relationship between change management practices and the overall performance of CBE?

1.5. Hypothesis

Ho [1] Change management practices have no effect on organizational performance of CBE

Ho [2] Employees motivation has no effect on the overall performance of CBE

H0 [3] Organizational culture has no effect on the overall performance of CBE

Ho [4] There is no statistically significant relationship between change management practices and the overall performance of CBE

Ho [5] There is no statistically significant relationship between change management practices and the overall performance of CBE

1.6. Significance of the study

The direct recipients of the output of this study are the top level management with a need to recognize the effect of the change management on the performance of the organization and what other factors other than the change management has an influence on the overall performance of an organization. The study might provide relevant information to those on various levels of management and employees to understand the determinant factors for the successful implementation of the change management so that the performance of the organization can be

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 enhanced. Under this study, the researcher has seen whether employees’ motivation and organizational culture determine the performance of the organization other than the change management. Employees might become also the beneficiaries from the outcome of this study since the participation of employees in the management of the change program can enhances creativity of the employees so that they can be aware of many issues. The society can also be benefited from this study since the different adjustments on the change management of CBE can cater the needs of the society in different dimension as a means to satisfy them. The study might also be used as a literature for further studies.

1.7. Scope of the study

The study was limited to only one commercial bank in Ethiopia namely CBE in Addis Ababa to study the process of change management practices and its effect on the organizational performance. The study was concerned with investigating the effects of change management practices on performance of an organization as well as the relationship between gender, employees’ motivation & the organizational culture and their effect on the overall performance. Thus under this study the determinants of organizational performance comprises gender, change management practice, employees’ motivation and organizational culture, considering all determinant factors of organizational performance was beyond the scope of this study.

1.8. Definition of Terms

Change Management: activity involved in defining and instilling new values, attitudes, norms, and behaviors within an organization that support new ways of doing work and overcome resistance to change.

Change management practice: was taken to be as a systematic approach to dealing with change from the perspective of an organization and on the individual level

Employees’ Motivation: defined by Robbins as cited by Ramlall, (2004) the willingness to exert high levels of effort toward organizational goals, conditioned by the effort’s ability to satisfy some individual need.

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

Organizational Culture: Organizational culture is the set of shared beliefs, values, and norms that influence the way members think, feel, and behave (Fred, 2011)

Organizational Performance: in this study it is taken to be the actual output or results of an organization measured by financial and non-financial measures.

Augmented change management practices: in this study it is taken to be the combination of employees’ motivation, organizational culture, and change management practice.

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

CHAPTER TWO

REVIEW OF RELATED LITERATURES

2.1. Introduction

Change is the process of becoming different from the previous state of operation for a better performance in order to become competent and to become selected at first glance from other competitors. The management of the change process is a key to the success of every change that needs to happen within an organization and also for an effective and high performance. Thus, this section reviews both the theoretical and empirical literatures related to the change management and its effect on the performance of an organization.

Generally, the review of literature attempts to focus on the following things:

 The meaning and concepts of change,  Models for understanding and approaching change  Challenges of change  The effects of change management practices on the performance of an organization  Employees’ motivation and Organizational Culture: factors that affect the performance of an organization  Empirical Literature Reviews

2.2. Meanings and concepts of change

The constancy of change is a widely noted theme in any reading of the literature of organizational management. Phrases such “the only constant factor in (organizational) life is the need to change” are commonly encountered Ian Smith, (2011). In every aspect of life and business, change prevails. Change is necessary in order to perform better than the normal conduct. In business organizations, the need for change is mainly to improve its delivery of services to its clients and improving the overall performance of an organization. Change should be aimed toward improving the existing system and should be done continuously (Gerard, 2008). Change is an alteration in the state or quality of anything. It is the state of becoming or being

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 different from the previous known existence. Change has become a study area for many years and all those studies about change aim with varying degrees of credibility and success to deliver sustainable organizational change (Rune Todnem, 2005).

Organizations are addressing different changes like; a larger worldwide market place made smaller by improved technologies and competition from outside, a global acknowledgement of the environment as a powerful variable and government attempts to draw back from environmental disaster, Health consciousness as a permanent trend amongst all age groups throughout the world, Changes in lifestyle trends are affecting the way in which people view work, purchases, leisure time and society, The changing workplace creates a need for non- traditional employees, The knowledge asset of the company, its people, is becoming increasingly crucial to its competitive wellbeing (Paton &McCalman, 2008).

Any organization that ignores change does so at its own peril. One might suggest that for many the peril would come sooner rather than later. To survive and prosper, organizations must adopt strategies that realistically reflect their ability to manage multiple future scenarios. The world is constantly changing around us, both in our private and our working lives. To manage these changes we develop coping strategies. Managers, and the enterprises they serve, be they public or private, service or manufacturing will continue to be judged upon their ability to effectively and efficiently manage change (Todnem, 2005).Change in organizations may be continuous and incremental or rapid and discontinuous with abrupt shifts from the patterns of the past. Change may be planned or it may be emergent. The scale of change may range from fine-tuning through incremental and or modular adjustment to wide scale corporate transformation. Organizations sometimes have choices as to whether they want to change, or are sometimes forced to change, because of legal or other reasons. The importance of why organizations change is linked to the timing of change (Ian Smith, 2011).

The push and pull factors of organizational change may be seen as an essentially linear series of planned events – for example, Lewin’s (1951) unfreeze- change-refreeze model or change may be open ended, ongoing and adaptive responding to changing circumstances (Kanter et al., 1992 as cited by Ian Smith, 2011). Otherwise the change may be between these two extremes of planned or free and open ended.

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

Different reports show that the success rate of any change effort is failing either fully or partially (between 50%-70%) to achieve their objectives. This statistic makes worrying reading for any manager undertaking or considering a change initiative. What then can assist in getting change right and leading and managing change successfully?

2.3. Models for Understanding and Approaching change

There are many approaches, tools and methods proposed for managing change. There is no one “right” approach. That said conceptual models of the process of change are useful in understanding the dynamics of change and how change management might best be approached. Under this section some of the models will be briefly considered;

2.3.1. Lewin Three step Model; Organism, Machine

On the work of (Esther.& Mike, 2004), K. Lewin (1951) developed his ideas about organizational change from the perspective of organism metaphor. He introduces the force field analysis, which explains the driving and resisting forces in any change situations. The main issue here is that the driving forces to the new change must be greater than that of the resisting forces of the change for the change to become successful. Managers are expected to increase the driving forces and reduce the resisting forces to change. It would be more advantageous for the organization if they can do both at the same time.

Lewin also suggests a way of looking at the overall process of making changes; Unfreezing, Change and Refreezing; beginning from the existed situation, you change things then continue with the new created situation (Mike, 2007). The three step model of Lewin uses the organism metaphor of organizations which includes the notion of equilibrium. This means that any organization has a natural tendency to adjust itself back to its original steady state. This idea of Lewin has been criticized since the model is too linear for these turbulent times of exponential changes since there is no initial equilibrium that needs to be unfrozen for the change to happen (Esther & Mike, 2004). At the same time there is no stable equilibrium that we need to settle down and leave our worries. So what Lewin was suggesting was that in any human system there are different states of dynamic equilibrium and to move from one state to another the forces at

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 play within the system need to be redirected to achieve movement towards the preferred state (Mike, 2007).

2.3.2. Predictable Phenomenon/ Planned Change

(Esther and Mike, 2004) states that Bullock and Batten, 1986 explains the approach of using the machine metaphor in the organizations. This model assumed that change can be planned so that organizations can move forward in a defined way. This approach suggests that the organizational change is a mechanical problem which can be dealt with definable mechanical solution. It can be said that this approach works well with separated issues that can be dealt alone rather than when organizations are facing complex and unique changes which may require discussing the current situation and possible future outcomes that can satisfy the organization before we run in to deciding on one approach. When the changes are planned we decide the direction, objectives, stages, milestones, change methods and so on that the organization is expected to pass. As it is said by Mike Green (2007) if the change is planned more as a simplistic machine metaphor, the less successful the change will become.

2.3.3. Uniform Approach/ top-down

Top–down change can stem from a managerial prerogative for maintaining control throughout the change. Change can be driven through by management, and resistance controlled and eliminated. Here change can become more of a political issue (Gioia and Thomas 1996).Top- down restructuring is a management-driven process that is not necessarily consensus-seeking. In the particular culture, such a process would alienate employees further if not accompanied by a bottom-up process that empowers individuals, who need to feel like stakeholders with something to gain as well as to lose.

In the top-down approaches to change, senior executives are responsible for the initiation of the need for change, the plan and the direct implementation of the change process. The middle management is responsible for the detailed coordination and internal management of change and the rest of employees will embed the change, even though they have little power in the process of decision making. This approach to change is mostly appropriate when the change is strategically important and results large difference from the present forms and functions of an organization. It

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 would be more preferable for the most senior people in the organization favor and initiates the change when the change is more of radical. Top-down approach to change is mostly occurs as a result of the external pressure to change combined with the potential internal resistance to change (Ryan., Williams, Charles.,& Waterhouse , 2008).

2.3.4. Differentiated Approach/ Bottom- up

The bottom-up approach is an approach that allows the employees of a given organization to express their views and to help define the development course for their area in line with their own views, expectations and plans. It is a democratic and consultative style of organizational change in which employee participation is promoted at all levels within the organization. Maximizing the involvement of staff within an organization in building of process maps and initiating the change efforts is a more efficient and rewarding approach for companies. By driving organizational changes from the bottom up, employees become more creative, motivated and more open to share their ideas (Michael C., 2002).

This approach can enable firms to promote innovation and thus build flexibility. It also enables executives of organizations to collect the information about new technologies, unexpected problems, changing market competition and customer demands thus develop the firms’ exploratory innovation which increases firm’s strategic adaptability for future change (Zelong W. Yi Y, & Yuan C., 2011).

In order for the employees of an organization to truly take control of the new change, they must be fully involved in the process and must be included in some way in the decision-making process.

2.3.5. Complex Phenomenon/ Emergent Change

Emergent approach to change can be described as unexpected, often unintentional, can come from everywhere, and involves relatively informal self-organizing (Mike Green, 2007).It is evidenced that many organizations these days operate in chaos and high competition that can result difficulty and instability in the industry. This chaos and instability in an industry make the changes to become emergent and continuous. Emergent change occurs in real time and therefore

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 develops ongoing realignment with the environment, continuous learning and the establishment of strategy (Liebhart, Margrit and Garcia-Lorenzo, 2010).

The research of Higgs and Rowland (2005) as it is sited in (Mike Green, 2007) depicts that Change through emergent is more successful as there is a large scale change than the other approaches to change.

2.3.6. Gestalt Psychotherapy Theory

The gestalt psychotherapy theory offers a more basic epistemological shift in that meaning is found as we are constructed built by the world while at the same time we are building this world emanating from our own background and experiences. The author (Chidiac 2013) tries to show how this theory of Gestalts view of self applies to an organization.

In Gestalt theory, our sense of self emanates at every moment from our interaction with others and the environment. Therefore we can say that the self is changing constantly and adjusting according to the situation within which it finds itself. The self “is fluid and dynamic, responsive to the environment, and experiencing changing needs and goals as the situation changes” as the author depicts.

Organizations, like individual people or groups can be seen through the lens of the gestalt theory of self since they are shaped by a network of emerging relationships and depend on those relationships. As this relationships changes organizations are also constantly changing. This theory clearly shows that the resulting behavior and action of an organization emerges as a function of both the dynamics within the organization’s internal and external environment and the ingrained narrative and culture of the business. The poor awareness of the organizations id function in terms of internal dynamics as well as external influences will result in a less sensitive organization and one that is not able to adapt to its changing environment.

Being aware of a changing environment is not always enough for an organization (and its leadership) to take action. Attending to emergent needs requires a supportive environment. The interrelated aspects of self-functioning need to be considered as a whole, and cultural adaptability as well as fit to internal/external pressures and market needs will determine organizational performance.

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

2.4. Challenges of Change

Different changes usually engage bringing of new procedures, people or ways of doing things which have a direct impact on the diverse stakeholders within an organization. Change management can become successful when there is an understanding of the potential effects of the change initiatives on these stakeholders. Will employees be scared, resistant, pessimistic or enthusiastic about your proposed changes? How can each possible reaction be anticipated and managed? You have to be aware of how the change will impact others in your organization and customers as you started to think about any kind of significant change.

Leadership: can be impacted by the new significant changes that you try to impose in your organization. Since it is undeniable for the change to become successful there has to be a commitment and engagement of organization’s leaders.

Resistance: Duncan (1977, p. 63) as cited by Dianne. &Amrik (1998) define resistance as any conduct that serves to maintain the status quo in the face of pressure to alter the status quo. Bringing in new skills or knowledge to a company is not always easy. People fear change. Management should observe this integration and smooth the way by keeping everyone aware of the objectives of the company. Improvement of resistance management can result if the organization recognizes the potential benefits of resistance (Olajide, 2014).

As it has been discussed in Warner (2002), resistance to change emanates from two circumstances. The first one is “loss of the unknown” i.e., leaving the comfortable zone of the existing situation and trying to adapt the new one. Most of the time problems arise not because employees don’t want the change to happen but it is because they don’t want to lose their comfort zone. The second one is “loss of their personal choice”. It also states that “what people are resisting is not necessarily the change but the imposition of change.” “Grief has limits, whereas apprehension has none. For we grieve only for what has happened, but we fear all that possibly may happen” Pliny the Younger (A.D. 61-113) as sited by Warner (2002).

2.5. Practices of Managing Changes

Hans, Lawrence & Andreas (2009) depicts that methods of managing changes have not yet spread through business or project operations to a significant degree. If performed successfully

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 the practices of managing changes can yield tangible benefits for companies. As stated by Hans et. al., (2009) practitioners who always follow specific and formal change management procedures had a 52% project success rate, compared to a 36% success rate for practitioners who improvise according to the situation.

2.5.1. Creating a sense of urgency to reinforce the need for change

As cited by Harry (2001), French and Bell 1999,; Kotter 1996,; & Turner 1999, states that the first step in the process of change is establishing the sense of urgency, i.e., making sure that all people involved in the change effort have internalized the need for it. Creating a sense of urgency is about problem awareness which means that difficulties in the organization must be translated into a desire to change since one of the most crucial factors for success is understanding the subject matter of the project. Kotter (1996) notes that the means for trounce problems lays on the understanding of organizational change: what are the most important drivers of change and which are the underlying reasons for the opposition. Additionally, management should have a clear understanding of the trade-offs included in carrying out change. Without considering trade-offs, managers easily initiate and launch programs they are not ready to support in practice.

An attempt for change should therefore start with an agreed urgency and clear need to develop. It is agreed that people affected by the changes or participating in its planning and implementation should have a shared understanding of the reasons that led to the change effort in the first place (Harry, 2001). Inappropriately, the attempt needed to raise the sense of urgency is often under carried out said Kotter (1996). Employees have to take a broader, more flexible look at what they do, and what they could do for developing an organization.

Supporting more people to become more powerful is an important issue as the business environment is changing. It is thus not only employees and project personnel’s but also management’s concern to have an active role in a change project. On the other hand, managers should be aware of the spirit of giving people a change to move slowly forward, find out the dearth of the organization by themselves, and finally to seek out and develop solutions for a better future (Kotter, 1996).

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2.5.2. Providing people with facts, figures and evidence to persuade them for change Communication is an important means for building a common understanding of organization’s goals and direction. There has to be an open and honest communication about the facts, figures and evidences to persuade everyone in the organization for change. Kotter, (1996) states that communication is a means to create awareness to the personnel what the change project is really about: why is it started, what parts of the organization are affected and what are its targets and schedules. Kotter again states that the real power of setting goals, envisioning and planning is communication and without it there may not be a full effect.

In relatively unstructured assignments, people need to know where they stand and what will happen next more than ever. Otherwise critical actions and phases may be ignored and resources may be allocated for accomplishing secondary actions. One very important element for the success of managing change is the ability to communicate to employees the kind of changes the scheme will obviously cause to each person’s responsibilities, tasks and working environment. The more open and thorough communication is undertaken, the more trust is likely to develop between different parties involved in the change (Kaufman 1992) cited by Harry (2001).

2.5.3. Selecting the right people to form the guiding coalition

A project organization is always pulled together for a specific temporary purpose. It is an Inter- organizational team constructed around its mission. Because of its inter-organizational nature, a matrix organization encompassing both functional and project unit is usually formed. However, a great variety of project-driven organizational forms exists. According to Cleland (1994), one extreme is the pure project organization, where” the project manager is given full authority to run a project as if it were a one-product company”. When we start moving towards the other extreme, the pure functional organizational department, we come across with a variety of project-functional combinations of matrix organization.

Fatima, Alyaa, & Abdul Rahman (2013) mentioned that people are normally negative towards any changes, so mitigating the resistances of people and attract their attention by illustrating how well the change will participate in their success and future growth is critical responsibility in forming the guiding coalition. The change manager must ensure to obtain Top management, potential stakeholders and organizational support.

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Cleland points out that no form of project organization is best for all projects, or even best for one single project throughout its entire life cycle. Each form has some advantages and disadvantages, yet he also notes that those projects with purely functional structures and responsibilities tend to be less successful than those with joint responsibilities and cooperation of project representatives and different functions (Cleland, 1994).

Kotter addresses the importance of choosing the right people for the project organization and for the guiding coalition, in particular. Different kinds of roles and qualities must be represented. Enough key players must be in the team, various points of views should be present, people with good reputation are important and, finally, proven leaders are needed, in particular. Identifying the key persons and thus forming the core of the change project is an essential part of any kind of change effort and it should be carried out in the very early stages of the progress (Kotter, 1996).

2.5.4. Creating clear and tangible vision for change

Vision provides a picture of the future and shows how individuals and groups will fit into that future. A vision is thus an anticipation of the future state of an organization and responds to the question: What it is to be like? A good vision shows the direction for development. By Kotter’s (1996) definition, a good vision is imaginable, desirable, feasible, focused, flexible, and communicable at the same time. Communicability and simplicity are thus the essential criteria of a successful vision which made easy the formation of talent and skillful team members that are competent to handle the change effectively is very important (Fatima et. al., 2013). Therefore, required training and education should be provided to empower team members and increase their level of qualification with the clear and tangible vision.

The vision for change will materialize through the goals of the development projects. The connections with the vision will make it easier to justify the goals to people dealing with the project and helps them commit themselves to the objectives (Lanning et al. 1999 cited by Harri, 2001).

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2.6. The effects of change management Practices on the performance of an organization

Managing change or ‘change management’ is a form of management control through the application of systematic management interventions that involve people to achieve a desired future state with defined performance outcomes in line with the organizational strategy (Gary.and French 2013). Undertaking a change management program is neither easy nor should be thought of as a “quick-fix”. Recognition of the need to justify, communicate and train staff in change management to minimize resistance to proposed change not only needs to be more sensitively managed today, but has always been a feature of undertaking change from established practices across the ages.

In agreeing an appropriate strategy or combination of strategies for change, the organization’s management will need to take into account the following factors:

 The urgency of the situation;  The degree of the opposition expected;  The power base of the change initiator;  The existing transparency of information and ease of communication;  Demonstrable examples of commitment to integrated planning during the change program;  The nature of the current organization’s culture and its likely response to change.

Communication: Continued employee involvement and consultation through a rolling communications program will need to be developed to assure the employees of the importance of the changes, how they can be involved and how they can support the changes to the business. In addition the organization’s management will need to further assist this process through open dialogues with staff and by conducting research in to their concerns and reacting to the findings. Consequently it is essential that organizations establish a level of openness and engagement throughout the full change management life-cycle which transcends policies, procedures and statutory obligations and carefully considers how critical the involvement of all employees is in helping deliver the change. Continuous change is a global reality. Those who communicate effectively are more likely to outperform their peers (Towers Watson, 2012).

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Improved organizational performance is not only about the application of hard and fast rules for achievement, but rather an acceptance and ownership of the impact the totality of factors in shaping our organizational behaviors during periods of change.

2.7. Organizational Culture and Employees’ motivation; Factors that affect Organizational Performance

Daniel (1999) defines organizational culture as concerned with the underlying values, beliefs and principles that serve as a foundation for an organization's management system, as well as the set of management practices and behaviors that both exemplify and reinforce those basic principles. Additionally, Fred (2011) noted that organizational culture is the set of shared beliefs, values, and norms that influence the way members think, feel, and behave. Culture relates to the informal aspects of organizations rather than their official elements. They focus on the values, beliefs and norms of individuals in the organization and how these individual perceptions coalesce into shared meanings. The developing importance of culture arises partly from a wish to understand, and operate more effectively within, this informal domain of the values and beliefs of teachers, support staff and other stakeholders.

Different forms of organizational culture could lead to be supportive of, or against organizational change in different situations. It is very critical and important to emphasize and assess the role and influence of organizational culture in change management. (Song, 2011) since the culture of the organization can result in a negative overall performance of an organization. All in all, considerations must be given to managing organizational culture or even changing the strategy to take account of the culture in change management.

Culture is particularly important because it can powerfully influence human behavior and its near invisibility makes it difficult to address correctly (Kotter, 1996). The nature of culture of an organization (invisibility) can have a high impact on the overall performance. Harri (2001) cited the note of Burke (1994), directly attempting to change the culture of an organization creates difficulties.

Organizational growth, while considered a very positive change, can have a negative effect on the environment and employee attitude (Fred, 2011).While managing change focus needs to be

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 pointed on how to keep motivation and loyalty of workers up. Several researches and observations have shown that well motivated employees are more productive and creative. On the other hand less motivated employees do not want to contribute into work.

Katcher et al 2007, cited by Mashhura Sidikova (2011) almost 43 percent of all employees feel insecure about their job while going through change. Those anxious employees typically feel insecure and lose self-confidence and are not best performers and team players. They become reluctant to express their useful opinions and ideas or to develop innovative approaches to their everyday work.

2.8. Empirical Literature Review

A study of Allan., Church, Siegal, Javitch, Waclawski and Warner Burke, (1996) clearly shows that Managers and executives continues to possess a great deal about the management of the organizational side of change (82%), evaluating the impact of such efforts (75%) and the planning of change (71%), unfortunately these managers and executives’ scores lower in areas related to the nature of change and its effects on people in general. The study also reflects that the women score in understanding the soft side of change management is much greater (74%) than that of the male managers (66%) definitely male managers need to learn much from the female managers since many managers and executives are more comfortable focusing on task rather than relationship issues. The scholars’ tries to show this variation is created because women have greater sensitivity and responsiveness to the needs of their peers; the more interpersonally oriented socialization patterns experienced by women; the different roles to which men and women are selected within organizations. The soft side of the change management includes the importance of open communication, letting people to feel sad about the loss of the present, working with and through resistance, initiating people’s positive energy around change, etc.

Similarly another study of Tony Manning, (2012) shows that for the management of change to become successful, it is important and mandatory to manage emotions, particularly by acknowledging how people feel and why they feel the way they do; take steps to formulate a vision and keep the people informed about the steps that you are taking; engage in a two way communication throughout the process; develop and communicate visions, make clear what you

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 aspire to and how you will get there; and engage in and promote continuous learning and development.

Another study of Darwaza (2003) which is sited on Omar, Mohammed, Abdullah, & NuraJadellah (2013), found that years of experience in school administration and education have a significant impact on the development decisions taken by the Director and giving the best change. Unlikely under the study of (Allan H. et al 1996) unexpectedly finds out that the more managers and executives are experienced in the management position of their organization the more they respond negatively to the management of change. These two different results about the impact of experience of executives in their work place on the effectiveness of the change can be because of the time variation. The former study which was taken in 2013 and the later in 1996, since there is more than a fifteen years gap the knowledge of change may not be clearly understood by the managers and executives in the year of 1996.

Under a study of Sefer, Huseyin,& Recaiel, (2013), informing the employees about what is going on regarding change, consulting them and maintaining participation of the employees to the change process, have a positive impact on the attitudes of security managers towards change managers and change. Then the employees would probably commit themselves to change energetically rather than resisting it. Another study also depicts that participation of employees can be a useful approach that sheds light along the change process so that the sources of resistance to change can be overwhelmed and the performance of the organization enhanced ManuelaPardo-del-Val Clara Martínez-Fuentes Salvador Roig-Dobón, (2012).

Majid, Mohammad, Sanjaghi & Rahimian, (2013) shows that high percentage of organizational performance change (77.3%) is because of the high capacity of the change process and the management of it. Additionally effective communication, employee’s attitude and perception of manager’s action and conducive working environment play a significant role in achieving better organizational performance through change Mindy, Joseph. Cheng and Sonja (2006).

Under the study of John Edmonds, (2011), there is resistance to change in organizations mostly brought by the fear of the unknown by the people of the organization. The study also shows that this resistance to change can be handled correctly using known and tested techniques of change management so that the change can be brought successfully, achieving the sated goals and

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 objectives using the budget of the organization for the needed purpose. Consequently employees and managers who understand the change effort are more likely to be less resistant to change Marvin & Marla, (2005). Precisely, the more the manager and employees understood the change the more likely they will be in to it, the less likely they would think the change effort would fail.

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CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY

The purpose of this study was to investigate the effects of change management practices on performance of an organization as well as the relationship between gender, employees’ motivation & the organizational culture and their effect on the overall performance of an organization by focusing on Commercial Bank of Ethiopia particularly in Addis Ababa city administration. The intent of this section is to discuss the research design, population, sampling method, pilot study, procedures of data collection and the data collection instruments.

3.1. Design of the study

This study was a descriptive quantitative survey study which is a useful means for testing objective theories by examining the two variables; change management practices and performance of the organization (Creswell, 2009). Murshidi (2005) further depicts that this methodology is useful for the study of attitudes and other psychological constructs such as behaviors and beliefs. The data collected using a survey strategy gave more control over the research process and when sampling was used it was possible to generate findings that were representative of the whole population at a lower cost than collecting the data for the whole population (Saunders, 2009).

A path analysis model was used to investigate the relationship among change management practices, employees’ motivation, organizational culture and performance of an organization. According to Schumacker and Lomax (2004, cited in Benjamin, 2008), a path analysis model is the logical extension of a multiple regression model where any number of independent and dependent variables are used to establish any number of equations.

3.2. Population and Sampling

The population of the study was the employees of Commercial Bank of Ethiopia in Addis Ababa including top level managers. The representative sample of this study consisted of subsets of the population which allows for the study results to be generalized. According to the information

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 obtained from the main office, the branches of Commercial Bank of Ethiopia in Addis Ababa are geographically dispersed in 4 districts namely North-Addis, South-Addis, East-Addis and West- Addis. In these 4 districts, the numbers of branches and employees are listed in the following table (table 1). From each districts three branches were randomly selected. The characteristics of the sample population were intended to be representative of the target population.

Table 1 : number of branches and employees in each district

No District No of CBE branches No of employees 1 West district 38 1186 2 East district 50 1439 3 South district 46 1476 4 North district 47 1696 Total 272 5797 [Source: Commercial Bank of Ethiopia, Head Office, 2015]

The population of this study is widely distributed geographically and occurs in natural clusters (branches). Hence it is evident to use cluster sampling, and so all of the employees in the selected sample branch were included in the study. According to Ahmed (2009) cluster sampling is also suitable for survey of institution. Accordingly, 12 clusters (branches) were selected using simple random sampling. To obtain a representative sample from each district three branches were taken from each district. In this study, the sample size was determined by using the formula developed by (Kasunic2005: 40) using 95% confidence interval and 95% precision: N n 1N(e)2

Where, n = the sample size

N = Total population

e = Sampling error (e=1-precision)

Using this formula we can calculate the sample size:

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

N5797 e10.950.05 n 5797 374.18374 15797(0.05)2

Accordingly, the sample size for this study was 374 comprising staffs and managers. However, due to the sampling technique used (cluster sampling) the number of questionnaires totally distributed (561) were greater than the sample size (374). In cluster sampling any number greater than the sample size is acceptable Saunders et. al, (2009).

Accordingly the sample size for this study was 374 employees of CBE comprising staffs and managers. However 561 questionnaires were distributed to reduce the missing response rate. Since they were unwilling to complete the questionnaire, 296 employees were rejected from the study hence 265 employees participate in the study. This represents a 70.8% response rate. According to Babbie (2002) any response rate of 50% and above is adequate for analysis thus 70.8% is even better.

Table 2 Sample branches selected from the four districts

No Branches N n Rejected/ not responded 1 Mexico 35 20 15

2 Lideta 63 23 40

3 Gofa sefer 66 31 35 4 Yared 31 16 15 5 Kebena 18 12 6

6 4 kilo 99 35 64 7 18 mazoria 25 15 10

8 Kolfe 58 21 37 9 Habte giorgis 37 23 14

10 Megenagna 59 25 34 11 Shola gebeya 23 15 8

12 Meskel square 47 29 18 Total 561 265 296

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3.3. The pilot study

The objective of pilot study was to assess and improve the contents of the instrument and it is conducted prior to the main study. Hassein (2003) suggests that a pilot sample must be drawn from the population. And hence for this study, the pilot study was conducted in a randomly selected branch of CBE, (Sidist kilo branch). The selection of this pilot branch was done after the actual study branches have been identified. And hence for this study, the pilot study was conducted in a randomly selected district i.e., North Addis District (see Appendix 1). Under this district the remaining branches were listed in alphabetical order after the main study area branches were identified. In sadist kilo branch (the pilot study area) there were a total of 46 employees; 28 were males were as 18 were females. However, the pilot branch was not included in the actual study to reduce informed consent.

Before its use to the actual study the questionnaire was piloted on 46 respondents. Since they left many questions blank 14 participants were rejected from the pilot analysis. To ensure the reliability of this scale, the Cronbach alpha coefficient was used which calculates a coefficient of reliability that can lie between 0 and 1.

Based on the pilot study the questions in the questionnaire were totally 30 for change management practices, 7 for employees’ motivation, 7 for organizational culture and 12 for organizational performance.

3.4. Data Collection Instruments

After having determined the most suitable research strategy for this study in the previous section, it is necessary to decide on how the empirical data will be collected. A five point likert scale questionnaire were used for data collection and the questionnaire was divided into four parts. To measure change management practices, a 30 item five point likert scale were developed. Similarly, to measure employees’ motivation, organizational culture and organizational performance, a five point likert scale was developed, comprising 7, 9 and 12 items respectively.

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The participants’ rate from five possible alternatives: strongly agree, agree, neutral, disagree and strongly disagree. The following numeric values were assigned to the positively phrased questions: Strongly Agree = 5, Agree = 4, Neutral = 3, Disagree = 2 and Strongly Disagree = 1. And the following numeric values were assigned to negatively phrased questions: Strongly Agree = 1, Agree = 2, Neutral = 3, Disagree = 4 and Strongly Disagree = 5. Scores range from 39-143 for change management practices, 7-33 for employees motivation, 9-43 for organizational culture and 22-58 for the organizational performance and the sum total of all this items were used to determine the effect of change management practices on the organizational performance and to investigate the effects and relationships of employees motivation and organizational culture on the performance of CBE. After having determined the most suitable research strategy for this study in the previous section, it is necessary to decide on how the empirical data will be collected.

Prior to the actual data collection participants were informed about the purpose of the study and their role as a participant. During both a pilot study and the actual data collection an explanation has been provided that participation is voluntary and they were also informed of their anonymity i.e., the identity of any participant will not be mentioned in any part of the report.

3.5. Conceptual Framework

To facilitate the research process and to have clear understanding of the expected relationship among variables in the study, the following conceptual framework was developed to examine the effect of change management practices on organizational performance of CBE. The dependent variable in this study is organizational performance. This refers to the actual output or results of an organization measured by financial and non-financial measures. In this study, the independent variable, change management practice was taken to be as a systematic approach to dealing with change from the perspective of an organization and on the individual level. From these perspectives, change management practice is an activity involved in defining and instilling new values, attitudes, norms, and behaviors within an organization that support new ways of doing work and overcome resistance to change.

Managing changes include creating a sense of urgency to reinforce the need for change, providing people with facts, figures and evidence to persuade them for change, selecting the right

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 people to form the guiding coalition, getting the guiding coalition to work together as a team, creating clear and tangible vision for change, constructing effective strategies to deliver the vision, changing systems that get on the way of the changed vision, recruiting promote and develop the right people to promote change and ensuring the right people are chosen. The review of previous studies such as Ramezan, Ebrahim & Rahimian (2013); Khong and Richardson (2003) found that the change management has a positive effect on the performance of the organization. Sometimes things might get absurd even when the change management is implemented but the performance of the organization diminishes or became stagnant. This is because the overall performance of the organization might be affected by other factors like organizational culture, employees’ motivation and job security (McCabe, 2010; Song, 2009). The following figure shows the expected relationship of the variables treated in the study.

Organizational Culture Gender Organizational performance Change management practice Employees motivation

Figure 1 The initial path model for organizational performance The above figure shows the initial path model depicting the expected relationship between the variables in the study. Gender and change management practice were taken to be as an exogenous variable while employees motivation, organizational culture and organizational performance were taken to be as an endogenous variable. Exogenous variables in the above path model are those with no explicit causes (no arrows going to them). Endogenous variables in turn are those which do have incoming arrows. Endogenous variables include intervening causal variables and dependents. Intervening endogenous variables (employees’ motivation, organizational culture) have both incoming and outgoing causal arrows in the path diagram. The dependent variable (organizational performance) in turn have only incoming arrows.

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3.6. Validity and Reliability

To insure that the instruments measure what they are supposed to measure (validity), they were checked by advisors and colleagues. However, to ensure the reliability of the scales, the cronbach alpha coefficient was used. Before its use to the actual study the questionnaire was piloted on 46 respondents. Since they left many questions blank 14 participants were rejected from the pilot analysis. The reliability analysis shows that all instruments have good internal consistency. The following table shows the reliability coefficient of each instrument: Table 3: Reliability of the Instrument

Technique Instruments Reliability coefficient Change management practice scale  = 0.90 Organizational culture scale = 0.73 Cronbach’s alpha Employees motivation scale = 0.75 Organizational performance scale = 0.77

The above table shows that the internal consistency reliability of change management practice scale was 0.90 and the internal consistency reliability of organizational culture, employees’ motivation scale and organizational performance scale respectively was 0.73, 0.75 and 0.77 which indicated that all instruments have an acceptable level of reliability.

3.7. Data Collection Procedure

Prior to the beginning of the study, permission letter was sought and obtained from Arbaminch University College of Business and Economics (see appendix 2) for Commercial Bank of Ethiopia to kindly assist and cooperate with the researcher in the study. Then after, approval later was obtained from the Human Resource Department of CBE to each and every branches of CBE to cooperate for the study (see appendix 3). After receiving permission letter from the HRD the researcher proceeded to the selected branches for data collection. The entire instrument was given for volunteer employees of CBE including managers. Due to their busy time in providing services for customers, a two day gap was given to complete the questionnaire. Finally, the raw data obtained were coded in to SPSS software package for organization and analysis.

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3.8. Method of data analysis

Saunders et.al, (2009) states that data analysis gives meaning to data collected during research. Different graphs, charts and tables were used to summarize and organize data and for the case of statistical tests, a statistical package called SPSS were used to complete the data analysis and to answer the research questions raised in the study. Since all data were approximately normally distributed (see sec 4.1) parametric tests (correlation, regression and path analysis were employed).

Firstly, to determine the effects of change management practices on organizational performance and the effects of employees’ motivation and organizational culture on organizational performance, correlation analysis were computed followed by regression analysis. Finally the path analysis was conducted to investigate the direct and indirect effect of each predictor variable on the criterion variable.

3.9. Data Compilation and Coding

All data related to this study were collected and compiled using a computer spreadsheet program. Subjects were assigned a code at the beginning of the study which protected their privacy. In order to complete the data analysis, the data were coded within SPSS. Gender was coded as 0 or 1 (0 = female, 1 = male). Age was coded as 2, 3, or 4 (2= 18-30, 3= 31-45, 4= 46-60). Experience was coded as 5, 6, 7, 8, 9, or 10 (5=1-3, 6=4-5, 7=6-10, 8=11-15, 9=16-20 or 10=>20). The qualification of participants were also coded as 11, 12 or13 (11= Diploma, 12= Bachelor Degree or 13= Masters Degree).

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Chapter Four

Data Analysis and Interpretation

The purpose of this study was (1) to determine the effects of change management practices on the overall performance of CBE (2) to investigate the effects of employees’ motivation and organizational culture on the performance of CBE (3) to investigate the direct and indirect effect of change management practices on the overall performance of CBE and (4) to investigate the relationship between change management practices and the overall performance of CBE. The total participants of the study were N = 374, taken from twelve different branches of CBE. Based on participants’ responses (n=265), this chapter presents the results of statistical analysis carried out to answer the basic questions raised in the study.

For the first and second research questions, regression analysis was conducted. For the third research question, path analysis was conducted to investigate the direct and indirect effect of each predictor variable on the criterion variable. While for the fourth research question correlation analysis was used.

4.1. Normality of the Raw Data

Parametric tests such as Pearson correlation, regression, and path analysis are employed when probability sampling is used in the investigation, if variables of the study can be classified at interval scale; the obtained data are normally distributed (Creswell, 2009). In this study all variables have five ordered levels and hence there was a need to check for normality to undergo parametric tests. Thus to determine whether these variables are normally distributed or not, skewness was computed. The skewness shows how far the data are asymmetrical in relation to a normal curve of distribution. If the skewness is less than plus or minus one (< +/-1.0), the variables are at least approximately normal (Barrett & Morgan, 2005). The following table shows the skewness of all variables:

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Table 4: Descriptive statistics of the variables treated in the study

N Std. Skewness Variables Minimum Maximum Mean Devia statisti Std. tion cs error Change management practice 265 1.3 4.76 3.45 .51 -.57 .150 Employee’s motivation 265 1 4.71 2.91 .73 -.039 .150 Organizational culture 265 1 4.77 3.44 .65 -.67 .150 Organizational performance 265 1.33 4.83 3.38 .55 -.12 .150 The above table provides descriptive statistics for all of the variables in this study. The descriptive statistics included are the number of subjects (N), the Minimum (lowest) and Maximum (highest) scores, the Mean (or average) for each variable, the standard deviation and the Skewness statistic and the Std. Error of the skewness. The assumption that is checked from the above table is normality. Accordingly, all variables were approximately normally distributed; that is, they have skewness values between -1 and 1. Thus, we can assume that they are more like scale variables, and we can use parametric tests that have the assumption of normality. Therefore, to undergo the data analysis parametric tests were used.

4.2. Demographic information of participants of the study

Figure 2: Participants of the study

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The above figure shows participants of the study, depicting male employees were dominant in CBE Addis Ababa. Male participants comprise 68.7% while female participants comprise 31.3%. This shows that there were few female employees in CBE.

4.3. Analysis of Biographical Data

The following table illustrates biographical information of the participants as they respond.

Table 5: participants’ biographical information

Biography Frequency % 18-30 214 80.8 Age 31-45 44 16.6 46-60 6 2.3 >60 1 0.4 1-3 160 60.4 Service year 4-5 58 21.9 6-10 32 12.1 11-15 1 0.4 16-20 3 1.1 >20 11 4.2 Diploma 13 4.9 Qualification Bachelor degree 232 87.5 Masters degree 20 7.5

Table 5 above illustrates the frequency distribution of the respondents by age showed that most of them (N= 214, 80.8%) were in the age category of 18 to 30 years. This group category is clearly the youngest age group who are able to initiate change and create innovative ideas in the organization. The respondents who belonged to the age category of 31 to 45 years constituted the second largest group of respondents (N= 44, 16.6%). The respondents who belong to the category of 46 to 60 were (N= 6, 2.3%) and one respondent was found in the age group greater

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 than 60 years constituted 3% of the sample. This shows that the employees’ of CBE in Addis Ababa city were predominantly young.

Table 5 also indicates that the largest group (N=160, 60.4%) of the respondents had three years or less service year. About 21.9% of the respondents had an experience of 4 and 5 years whereas 12.1% of the respondents were under the category of 6 to 10. The above table also shows that the highest academic qualification of the respondents was a masters degree comprising of 7.5%. The majority of the employees (87.5%) were bachelor degree holder. The remaining 4.9% of the respondents were diploma holder.

4.4. Correlation Analysis of the Variables in the Study

The correlations given in table 6 below are calculated using the statistical package SPSS version20 which usually provide exact probability values associated with each significant associations. In this study, the p values reported by SPSS were used to make decisions about the significance of correlations. That is if the p value is larger than 0.05, then the correlation is not significant, whereas if the p value is smaller than 0.05, then the correlation is significant. Therefore, if someone uses statistical software such as SPSS for correlation analysis, then he/she will not need to refer to a table of t values for significance test, because the result obtained for significance will be the same (George & Mallery, 2003).

Table 6: Pearson correlation for the variables treated in the study

Variables 1 2 3 4 5 1 Gender -- -.067 -.016 .011 .153* 2 Chang. M. practice -- .625** .619** .296** 3 E. motivation -- .550** .214** 4 O. culture -- .339** 5 O. performance -- Chang. M. practice: change management practice * * P< 0.01

E. motivation: employee’s motivation *P< 0.05

O. culture: organizational culture

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

O. performance: organizational performance

The correlation described in table 6 above contains a dichotomous variable (gender) thus the interpretations of correlation of other variables with gender were made based on the idea of De Coster (2004). He suggested that, if the analyst codes the dichotomous variable with values of 0 and 1, and then computes a standard Pearson correlation using this variable; it is mathematically equivalent to the point-biserial correlation. The interpretation of this variable is similar to the interpretation of the Pearson correlation. A positive correlation indicates that group associated with the value of 1 has larger values than the group associated with the value of 0. A negative correlation indicates that group associated with the value of 1 has smaller values than the group associated with the value of 0. In this study, gender codes were 1 for male and 0 for female.

Table 6 Portrayed that gender (the dichotomous variable) have no relationship with any of the variables in the study except with organizational performance r (263) = 0.153, p<0.05. This shows that male participants believe that there was a good performance in CBE than female participants. Additionally, change management practice was positively and significantly correlated with employee’s motivation r (263) = 0.625, p<0.05. This shows that employees who believe that the existence of good change management practice also have good motivation. Change management practice was also significantly correlated with organizational culture r (263) = 0.619, p<0.01, showing that the existence of good change management practice in the organization produces good culture in the organization. Similarly, the result of the study shows the existence of positive correlation between change management practice and organizational performance r (263) = 0.296, p<0.05. But according to Barrett & Morgan (2005) the effect size r = 0.296 was small or typical.

4.5. Change Management Practice and Organizational Performance

In order to determine the relationship between the change management practices, employees’ motivation, organizational culture and organizational performance, Pearson Product Moment Correlation was applied (see table 6). The result of this study revealed that the correlation between gender and change management practices was insignificant r (263) = -0.067, P>0.05 showing that there is no relationship between this two variables. Similarly, there is no significant correlation between gender and employees’ motivation r (263) = -0.16, p>0.05 as well as gender

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 and organizational culture r (263) = 0.11, P>0.05. On contrary gender shows a positive correlation with the performance of an organization r (263) = 0.153, P<0.05 showing that those male respondents of CBE replied that the performance of the organization is in a better condition than female respondents.

On the other hand, change management practices was positively and significantly correlated with employees’ motivation and organizational culture showing that a good change management practices occur with a good motivation of employees and organizational culture. Moreover change management practices had also a positive and significant relationship with the performance of the organization r(263) = 0.296, p<0.05. Similarly the study of Stiven et. al. (2015) shows the practices of change management has enhanced the performance of the institution and most employees in the institution have generally embraced the changes made in the organization with high motivation. Other studies like Gonaseelan (2008), Tony (2012), Sefer, Huseyin, & Recai, (2013), Dianne, (1994), J.S. Oakland & S.J. Tanner, (2007), Hans, Lawrence, & Andreas, (2009) and Majid, Mohammad, & Hassan, (2013) also support the findings of this study.

4.6. Multiple regression

To determine the effect or contribution of each independent variable on the dependent variable, multiple regression analysis was used. Accordingly, a significant model emerged F (4,264) = 11.729, P < 0.05) showing that the combination of independent variables (change management practice, organizational culture, employees’ motivation and gender), significantly predicts the dependent variable (performance of the organization). The following table shows summary of results from regression analysis.

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

Table 7: Regression analysis for organizational performance and components of variables

Multiple R = .391 Collinearity statistics R2 =.153 Adjusted R2 =.140 ANOVA table Tolerance VIF Sum of df Mean square F Sig. squares Regression 12.343 4 3.086 11.747 .000 Residual 68.297 260 .263 Total 80.639 264 Variables in the Equation Variables r B Std. Error Beta T Sig. Constant 1.962 .228 8.620 .000 Ch. M. practice .296 .184 .087 .171 2.116 .035 .496 2.016 Gender .153 .191 .068 .161 2.808 .005 .991 1.009 E. motivation .214 -.020 .057 -.026 -.343 .732 .566 1.766 O. culture .339 .207 .064 .245 3.249 .001 .571 1.751

The above table shows that the multiple correlation coefficient (R), using all the predictors simultaneously was .391 and R2= .153 confirming that 15.3% of the variance in organizational performance can be predicted from gender, change management practice, organizational culture and employees’ motivation. As it can be seen from table 7 above, the effect of employees’ motivation was insignificant, showing that employees’ motivation adds a little to the prediction of organizational performance. According to Barrett & Morgan (2005) all the variables need to be considered together when these values are computed. Because deleting one of the predictors that are not significant affects the levels of significance for other predictors.

Although change management practice and employees’ motivation were significantly correlated with organizational performance (see table 6), they did not contribute to the multiple regressions predicting organizational performance since their tolerance is less than 0.86. This was because of the occurrence of high correlation between change management practice and employees’ motivation and multiple regressions eliminate all overlap between predictors. Thus, neither change management practice nor employees’ motivation had much to contribute when gender

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015 and organizational culture were used as a predictor. The tolerance for change management practice and employees’ motivation was less than 0.86 (1-.0.140), indicating that too much multicollinearity (overlap between predictors) exists; the same is true for organizational culture. The rule of thumb to check for multicollinearity is that if the tolerance is greater than (l-R2), then it is evident that there is no multicollinearity (Barrett & Morgan, 2005).

Barrett & Morgan (2005) also assert a way of handling multicollinearity by combining variables that are highly related provided that it makes conceptual sense otherwise the researcher can eliminate one or more of the non significant variables. For the purpose of this study, the three variables namely: change management practice, organizational culture and employees’ motivation perpetually reflect the same thing under this study, which is dealing for the betterment of the organizational performance hence it makes conceptual sense. Thus, these three variables were combined to form a new variable ‘Augmented change management practices’. The new model is given in the following table:

Table 8: the new regression analysis for organizational performance and components of variables

Multiple R = .428 Collinearity statistics R2 =.183 Adjusted R2 =.177 ANOVA table Tolerance VIF Sum of df Mean square F Sig. squares Regression 14.782 2 7.391 29.403 .000 Residual 65.858 262 .251 Total 80.639 264 Variables in the Equation Variables r B Std. Error Beta T Sig. Constant 1.857 .204 9.108 .000 Augmented Ch. .400 .418 1.000 1.000 .058 .400 7.165 .000 Mgmt practices Gender .153 .183 .066 .154 2.751 .006 1.000 1.000

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

To determine the best linear combination of gender and change management for predicting organizational performance, multiple regression analysis was conducted by combining the three highly correlated variables (change management practice, organizational culture, and employees’ motivation). As it is indicated in the above table 8 the combination of gender and augmented change management practices significantly predicted organizational performance, F (2,264) = 29.403, p<0.05, accordingly, the new model shows that the multiple correlation coefficient (R), using the two predictors simultaneously is 0.428 and R2= 0.183 confirming that 18.3% of the variance in organizational performance can be predicted from gender and augmented change management practices. This model predicts more of the variance in organizational performance than the previous model which contains high level of multicollinearity.

In the regression table above, since R2 = 0.183, then the combined effect of augmented change management practices and gender was 18.3% of the total variability on performance of the organization. The effect of each component (augmented change management practices and gender) on performance of the organization (CBE) can be found by:

2 (R = rCh.M βCh.M + rGen βGen) × 100%

[R2 = (0.400) × (0.400) + (0.153) × (0.154)] ×100%

18.3% ≈ 16% + 2.3%

Thus the contribution of augmented change management practices enhanced organizational performance by 16% while gender enhanced organizational performance by 2.3%. Similarly the works of Kabiru and Sabo (2013), Kamugisha S. (2013), Ravi T. (2014), and Olajide O. (2014), revealed that the performance of an organization can be improved by the change management practices.

4.7. Causal Relationship of the Variables Treated in the Study

Figure 3 below shows the initial hypothesized path model, including the standardized beta coefficients generated for each direct path. There was also some standardized coefficient (betas) which were not statistically significant. So, later on non-significant paths will be removed from the path model. Dotted lines indicate non-significant paths.

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

R= .614

0.161 R= .847 Organizational 0.053 Culture 0.245 Gender 0.026 0.623 Organizational performance Change management practice -0.026 0.627 Employees motivation

0.171

R = .609

Figure 3: A path model, portraying causal relationship of gender, change management practice, employees motivation, organizational culture and organizational performance As could be seen in the above figure, the effect of gender on organizational performance (β = 0.161, t = 2.806, p < 0.05) was statistically positive and significant. But the effect of gender on employees motivation (β= 0.026, t=0.548, p>0.05) was insignificant, revealing that sex of employees has no direct effect on employees’ motivation.

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

Table 9: Decomposition effect from the path analysis

Effect Intercept Standardized t P R2 (parameter coefficient estimate)(B) (beta) On organizational .153 performance Of gender .191 .161 2.808 .005 Of employees’ motivation -.020 -.026 -.343 .732 Of organizational culture .207 .245 3.249 .001 Of change management .184 .171 2.116 .035 practice On organizational culture .386 Of gender .075 .053 1.098 .273 Of change management .793 .623 12.840 .000 practice On employees motivation .391 Of gender .042 .026 .548 .584 Of change management .891 .627 12.976 .000 practice

The combined effect of gender, change management practice, employees’ motivation and organizational culture accounts 15.3% of the variability in organizational performance

(F(4,264)=11.729, p<0.05). Thus the variables other than those studied in this study accounted for 84.7% of the variability in organizational performance. The following table shows direct, indirect and total effect of each predictor variable on a criterion variable:

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

Table 10: Direct, indirect and total effect of each predictor variable on the criterion variable

Effect r Direct effect Indirect effect Total effect

On organizational performance

Of gender .159 .161 .0129 .173

Of change management .285 .171 .153 .323 practice

Of employees’ motivation .219 - - -

Of organizational culture .342 .245 - .245

On employees motivation

Of gender -.016 - - -

Of change management .625 .627 - .627 practice

On organizational culture

Of gender .011 .053 - .053

Of change management .619 .623 - .623 practice

The result of table 10 depicts that change management practice had a stronger direct effect on organizational performance than did any of the variables in the study. Change management practice had also the strongest direct effect on both organizational culture and employees’ motivation. The effect of change management practice on organizational performance was more direct than indirect; the same is true for gender. On the other hand there is no direct and indirect effect of employees’ motivation on organizational performance, but organizational culture have strongest direct effect on the performance of the organization than did any of the variables in the study. The following figure shows the final path model for organizational performance.

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

R= .614

0.161 R= .847 Organizational 0.053 Culture 0.245 Gender 0.026 0.623 Organizational performance Change management practice 0.627 Employees motivation

0.171

R = .609

Figure 4: the final path model for organizational performance Figure 4 illustrates the path analysis model with non-significant paths removed. The residual path coefficient(R) in the model represents factors that affect the endogenous variable that were not accounted in the model. Organizational performance of CBE was considered to be a function of gender, change management practice and organizational culture. All path coefficients from the independent variables to organizational performance were significant except for employees’ motivation; revealing that employees’ motivation had no effect on organizational performance. This might be due to the high multicollinearity or overlap obtained between independent variables. Besides, there is no direct and indirect effect between gender and employees, motivation.

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

This chapter includes a discussion of the findings of the study. The chapter begins with a summary and overview of the significant findings followed by conclusion. Finally, recommendations for practice and further research were given.

5.1. Summary of the Study and Overview of Significant Findings

This study focuses on the effects of change management practices on the overall performance of CBE. The participants were taken from 12 randomly selected branches of CBE in Addis Ababa. The objectives of the study were: (1) To determine the effects of change management practices on the overall performance of CBE. (2) To investigate the effects of employees motivation and organizational culture on the performance of CBE. (3) To investigate the direct and indirect effect of change management practices on the overall performance of CBE. (4) To investigate the relationship between change management practices and the overall performance of CBE.

To accomplish the goal, a quantitative study which is a survey study were used and a path analysis model was used to investigate the direct and indirect effect of each predictor variable on the criterion variable. The five point likert scale questionnaire were used as a data collection instrument. Participants of the study was 265 (Male=181 & Female =85). In this study, four research questions were addressed. The research questions were addressed using correlation analysis, regression analysis and path analysis. The research questions addressed in this study were:

 What is the effect of change management practices on the overall performance of CBE?  What is the effect of employees’ motivation and organizational culture on the performance of CBE?  What is the direct and indirect effect of change management practice on the overall performance of CBE?  Does there exist a statistically significant relationship between change management practices and the overall performance of CBE?

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

For the first research question, regression analysis was conducted to determine the effect of change management practice on the overall performance of the organization. The result of the study shows that the combination of independent variables (change management practice, organizational culture, employees’ motivation and gender), significantly predicted performance of the organization (F (4,264) = 11.747, P < 0.05). However, due to the occurrence of huge amount of multicollinearity (see sec 4.5), the prediction power of each independent variable was affected. To overcome this problem, the researcher decided to merge the highly correlated independent variables. Accordingly, the effect of the independent variables was improved from 15.3% to 18.3%; of this the effect of augmented change management practices was 16%.

For the second research question, the regression analysis shows that the effect of employees’ motivation (-0.55%) on the overall performance of the organization was insignificant and hence negligible. This resulted from the overlap that exists on the predictor variables. But the effect of organizational culture was significant and accounts 8.7% of the total variability in the organizational performance. As it is described in the previous paragraph to best predict the dependent variable (organizational performance), the three variables (employees’ motivation, organizational culture and change management practice) were taken together as augmented change management practices.

To determine the direct and indirect effect of each predictor variable on the criterion variable, path analysis which is the extension of multiple regression analysis was employed. Accordingly, organizational culture had a stronger direct effect on organizational performance than did any of the variables in the study. The effect of change management practice on organizational performance was more direct than indirect and the same is true for gender.

To determine whether there were a statistically significant relationship between change management practices and the overall performance of CBE, correlation analysis was employed. The analysis shows the existence of positive relationship (r = 0.296, p < 0.05).

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

5.2. Conclusions

Organizations are struggling to immerse themselves to continuing success and improved performance. This result would come when a better change management practices are undertaken without ambiguity. The performance of CBE is positively impacted by the presence of change management practices which tend to create a significant contribution on organizational competencies and in turn becomes a great boost for further enhancing innovativeness. Furthermore, special attention should be given to employees’ motivation and the culture under which every member of the organization lives in so that enhancements in the level of organizational performance occur. Continued employee involvement and consultation through a rolling communications program will need to be developed to assure the employees about the importance of the changes, how they can be involved and how they can support the changes to the business. Since there are high multicollinearity or overlap between change management practice, employees’ motivation and organization culture future researchers need to give attention when predicting organizational performance. Based on the aforementioned discussion and the findings of the study, the following conclusions were drawn:

 Change management practices were highly correlated with the increment of employees motivation  Change management practices was also significantly correlated with organizational culture  The study shows the existence of positive correlation between change management practice and organizational performance  18.3% of the variance in organizational performance were predicted from gender and augmented change management practices.

In addition to these, based on the results from path analysis, the following conclusions can also be drawn:  Sex of employees had no direct effect on employees’ motivation.  Organizational culture had a stronger direct effect on organizational performance than did any of the variables in the study. Change management practice in turn had the strongest direct effect on both organizational culture and employees’ motivation.

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

5.3. Recommendations

The researcher believes that the findings of this study have the potential to add value to the management of CBE as well as those who are interested in furthering the research in more detailed way. Based on the aforementioned discussion and conclusion, the following recommendations were made:  The management of CBE especially those who are responsible for implementing the changes should focus on the different practices of managing different changes to positively impact the performance of the organization.  The management of CBE should increase mechanisms to motivate its employees using different schemes based up on the tastes of the employees  The management of CBE should Enhance Trust and Confidence towards a more stakeholder and client-oriented organizational culture.  Future research should consider a longitudinal study to examine change management practices implementation and impact on organizational performance  Further research should also replicate this study in other cultures or countries.  Future research should give attention in selecting variables to predict organizational performance. Hence due to the existence of high multicollinearity, change management practice, employees’ motivation and organizational culture should not be taken together to predict organizational performance.  Further, top managers must ensure that their company’s change process bears the desirable characteristics studied under this research.  The banking industry is ever turbulent and sensitive to change so, organizations should be ready to accept change and activate the different practices of managing changes which will lead to achieve predetermined performance.

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

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Appendices

Appendix 1 List of Districts and branches included North-Addis District

Abune Petros Branch Gullele Branch

Abware Branch Kebena Branch

Addis Ababa Branch Kechene Branch

Addisu Gebeya Branch Kidiste Mariam Branch

Arada Giorgis Branch Mahteme Gandi Branch

Arat Kilo Branch Mehal Ketema Branch

Arbegnoch Branch Menagesha Branch

Asko Branch Mender 7 Branch

Bella Branch Mikililand Branch

Birhanena Selam Branch North Addis District Office

Dejach Wube Branch Rufael Branch

Dil Ber Branch Sebara Babur Branch

Enkulal Fabrica Branch Selassie Branch

Entoto Branch Sheger Branch

Ferensay Legasion Branch Shegole Branch

Filwuha Branch Shero Meda Branch

Gedam Sefer Branch Sidist Kilo Branch

Goha Tsion Branch Silk Amba Branch

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

Tedros Branch Yared Branch

Tikur Anbessa Branch Yohannes Branch

Winget Branch

South-Addis District

Adea Branch Hanna Mariam Branch

Adey Abeba Branch Jemu Branch

Africa Union Branch Joseph Branch

Akaki Branch Kaliti Branch

Balcha Abanefso Branch Kera Branch

Behere Tsige Branch Kirkos Kebele Branch

Beklo Bet Branch Lafto Branch

Bole Bulbula Branch Lideta Branch

Cheralia Branch Maremiabet Branch

Dil Gebeya Branch Mekanisa Good Shepered Branch

Ehil Depo Branch Mekanisa Michael Branch

Finfine Branch Mekanisa Branch

Gofa Camp Branch Meshoalkia Branch

Gofa Gebriel Branch Mexico Branch

Gofa Mebrat Branch Nefas Silk Branch

Gofa Sefer Branch Populare Branch

Gotera Branch Sarbet Branch

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

Saris 58 Mazoria Branch Shell Depo Branch

Saris Abbo Branch South-Addis District Office

Saris Addis Sefer Branch Temenja Yaj Branch

Senga Tera Branch Worku Sefer Branch

East-Addis District

Adwa Park Branch ECA Branch

Africa Avenue Branch Ednamol Branch

Airport Branch Emperial Akababi Branch

Andinet Branch Ethio-China Road Branch

Ankober Branch Gebriel Mesalemia Branch

Ayat Adebabay Branch Gerji Branch

Ayer Amba Michael Branch Gerji Mebrat Branch

Balderas Branch Gurd Shola Branch

Bambis Branch Haile G/selassie Branch

Beshalle Branch Haya Arat Akababi Branch

Bole Branch Hayahulet Mazoria Branch

Bole Medhanealem Branch Jakros Square Branch

Cargo Terminal Branch Kara Branch

China-Africa Branch Kazanchis Branch

CMC Branch Korea Hospital Branch

East-Addis District Office Kotebe Branch

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

Kotebe Kidanemihret Branch Sefera Akababi Branch

Lamberet Branch Shalla Akababi Branch

Megenagna Branch Shola Gebeya Branch

Meri Branch Summit Branch

Meseret Defar Branch Urael Branch

Meskel Square Branch Wollo Sefer Branch

Meskel-Flower Branch Wuha Limat Branch

Salite Mihiret Branch Yerer Ber Branch

West-Addis District

18-Mazoria Branch Berbere Berenda Branch

3 Kuter Mazoria Branch Betel Branch

Abakoran Branch Bomb Tera Branch

Abnet Branch Coca Mazoria Branch

Addis Ketema Branch Eyesus Gedam Branch

Addisu Michael Branch Geja Sefer Branch

Alem Bank Branch Gojam Berenda Branch

Alem Gena Branch Goma Tera Branch

Anwar Mesgid Branch Habtegiorgis Branch

Ashewa Meda Branch Hawariat Branch

Atena-Tera Branch Keranio Branch

Ayer Tena Branch Kolfe Branch

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

Lomi Meda Branch

Mehal Gebeya Branch

Poulos Branch

Repi Branch

Sebategna Branch

Sebeta Branch

Sefere Selam Branch

Somale Tera Branch

Tabot Maderia Branch

Teklehaymanot Branch

Tesfa Direjet Akababi Branch

Tor-Hailoch Branch

Trafic Sefer Branch

West-Addis District Office

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

Appendix 2 permission letter from Arbaminch University College of Business and Economics

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

Appendix 3. Approval letter from the Human Resource Department of CBE

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

Appendix 4 Questionnaire Arbaminch University

College of Business and Economics

Department of Management

A questionnaire to be filled by the employees of CBE

Dear respondents, this questionnaire is prepared to collect data that will be used for writing my masters thesis as a partial fulfillment of the program of graduate studies in Arbaminch University. The data obtained from this questionnaire is used for the purpose of this study only. All information will be kept confidential. Thus you are kindly requested to complete the questionnaire carefully and honestly. The researcher would like to sincerely express her thanks to you in anticipation for devoting your time and energy to complete this questionnaire. Your genuine response is the only way to reach a reliable research result. Thank you in advance for your cooperation.

Basic information

Sex: Male

Female

Age A. 18-30 C. 46-60 and B. 31-45 D. Above 60 Work Experience A. 1-3years D. 11-15 years B. 4-5years E. 16-20 years C. 6-10 years F. More than 20 years Your educational qualification: A. Diploma B. Undergraduate Degree C. Master Degree D. PhD

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

Direction: Below are statements which have been designed to assess the change management practices in your organization. Describe the situation as it is that you observe in the organization, not as you wish to be in the future. Accordingly, Indicate tick (√) mark under the five alternatives given below. The five alternatives are: Strongly Agree (SA), Agree (A), Neutral (N), Disagree (D), and Strongly Disagree (SD).

No ITEMS SA A N D SD Practices of Change Management 1 A sense of urgency is created to reinforce the need for change within the organization 2 New and improved ways to do work are continually encouraged and adopted. 3 People in the organization are assisted to see the need for change to take advantage of different opportunities or to resist threats 4 Obstacles at the process of change are identified and removed quickly 5 The consequences of inactivity to change are clarified 6 Employees are provided with initial guidance and encouragement to get things going 7 Facts, figures and evidences are provided to persuade employees for change 8 Communications about the change are provided to the impacted employees timely and relevant 9 To get backing and support from my team, there will be a discussion with team members about what is causing the need for change. 10 Communication about the change is limited to only those directly concerned with the project 11 The right people are selected to form the guiding coalition 12 There are people in the team of the change with strong positional power, broad expertise and high credibility 13 People with the leadership ability are highly present in the team for change 14 There is a high trust and credibility and expertise between the team members of the guiding coalition 15 The mix of individuals for the guiding coalition team is from similar levels of the organization 16 Groups are assembled with the power and energy to lead and

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

support a collaborative change effort. 17 I get the guiding coalition to work together as a team 18 Different parts of the organization often cooperate to create change 19 A clear and tangible vision for change are created 20 Visions are shaped to help steer the change effort and strategic initiatives are developed to achieve that vision 21 There is lack of clarity on where we are going in the future. 22 I desire to maintain the status quo rather than accepting the new changes 23 It is clearly understood by everyone why we should let go of the past, sacrifice and work hard in the present, and follow senior leadership into the future. 24 Effective strategies are constructed to deliver the vision 25 Individuals and groups are neglected through the change process 26 There are different mechanisms to realize whether the people in the organization understood the change 27 The processes that are used in the change are fair and transparent 28 There are different mechanisms to reduce the hindrance to change and reinforce the support of the change 29 Change is expected without being linked to incentives 30 The right people will be recruited, promoted and developed to promote change Employee Motivation 1 I would be happy to spend the rest of my career in this organization 2 I would leave CBE if I get a better job somewhere else 3 I am interested in acquiring additional skills/ Competence as a consequence of organizational change 4 The incentives that are provided to the employees are very satisfying.

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

5 There is an effective promotional opportunities in the organization 6 The company recognize and acknowledge my work 7 The management involve you in decision making which are connected to your department Organizational Culture 1 The glue that holds the organization together is loyalty and mutual trust. 2 Individual performance is emphasised as an important goal, achievements in increasing performance are rewarded. 3 Everyone is encouraged to volunteer their views and disagreement is seen as a positive attempt to improve things. 4 CBE is characterized by security of employment, conformity, predictability, and stability in relationships. 5 CBE is characterized by teamwork, consensus, and participation. 6 CBE is not characterized by individual risk-taking, innovation, freedom, and uniqueness. 7 The organization is a very personal place. It is like an extended family. People seem to share a lot of themselves. 8 There is a respect to those who work in the organization 9 There is a low support from the top of the organization. Financial Performance 1 Return on assets (ROA, %) in our company is well below the industry average. 2 Value added per employee in our company is well below the industry average. 3 The profitability of CBE shows an incremental scale over the past years. 4 Return on investment (ROI) in our company is well above the

THE EFFECTS OF CHANGE MANAGEMENT PRACTICES ON ORGANIZATIONAL PERFOFRMANCE 2015

industry average 5 Percentage sales from new services in our company are showing a dramatic increase. Non-Financial Performance 1 The turnover of employees due to internal reasons is very high within our company. 2 Work organization which includes the work load, number of people performing a job, hours and days on the job, length and number of rest breaks and days away from work, assignment of tasks and responsibilities and training for the tasks being performed are inefficient. 3 Absenteeism is in our company (relative to competition) very high. 4 Risk-taking within the company is worse than it is by our competitors. 5 Speed of dealing with customer complaints (comparatively to competition) is low. 6 Reputation of our company in eyes of the customers has declined. 7 We lose existing clients and do not manage to attract new- ones.

Thank you for your kind co-operation