Affect of power relations on organizational change and development Essay

Affect of power relations on organizational change and development - Essay Example The consolidation exercises resorted to by the various organizations have made the companies leaner and flatter as management levels are being eliminated. Organizations are now trying to reduce bureaucracy and make the executives directly responsible and accountable for their tasks. Political as well as institutional systems play an important role in the power dynamics during any organizational change process. Some of these forces resist change due to changing dynamics while others stimulate them for the same reason (cited in Boonstra and Gravenhorst 1998). During any change process, CEO and the management along with consultants etc try to use their power to influence the process of change. At times this use of power to influence others can cause resistance while at other times it can facilitate the change process as noted by Fable and Yukl (1992) Power dynamics can be displayed openly or invisibly by the agents involved. For example, Bachrach and Baratz (1962) say that management ca n exclude participation by keeping certain decision from being open to discussions during a change process. In open display of power dynamics, managers hold meeting and discussions where they try to convince and influence others through facts, expertise or experiences. Theories of power dynamics and change management Boonstra and Gravenhorst (1998) look at power dynamics under five different perspectives. They build on the various researches that have studied the bases of power and root their first perspective on these. They say that â€Å"change in organizations is demanded by the top management and they need their position and power in order to effect change† (Boonstra and Gravenhorst 1998). In the second perspective they say that personal power is also used and thought the starting point of change is power, logical arguments and facts to support change are presented. The next two perspectives are based on the research in organization theory and management. In the fourth pe rspective, they see the role of agencies in exerting power to control processes and the various â€Å"interest groups† use power to negotiate the direction in which the change process should go. So far, the use of power was prominently observable in the various perspectives. In the fifth perspective, this is more subtle. The change agents tend to instill values, norms and perceptions through â€Å"management of meaning† and emphasize on the usefulness aspects of the desired change. The fifth perspective is about using the models developed by the organizational learning and organizational schools. They say that these models use the power of discussions and employee participation to bring about the desired change. Earlier literature on power viewed it as the ability of the change agent to influence the subjects to accept that change within a particular reference context (French and Raven 1959). Boonstra and Gravenhorst (1998) say that Bass in 1960 described two sources o f power – personal and position. In the position power, a manager has received authority to act by virtue of his position in the organization. This is the dominating power of the management and any confrontations to proposals put forward by the management are considered as resistance and hence are intolerable as per Hardy and Clegg (1996) quoted by Boonstra and Gravenhorst (1998). Bouwen (1995) describe this authoritarian model of change as â€Å"

Corporate Risk Managemenet Assignment Example | Topics and Well Written Essays - 2250 words

Corporate Risk Managemenet - Assignment Example This paper seeks to provide an explanation on how to manage risk in a financial industry. Specifically, this paper provides an explanation on how to manage risks of a banking sector, and this is in regard to the taking of an insurance policy. In the banking sector, Risk management practices focuses on the operational risks, liquidity risks, credit risks, market risk and interest rate risk. This paper focuses mostly on the Credit risk of my hypothetical banking organization. The hypothetical name of my bank is the Bank of Venus. This is a bank, with a presence all over the country, and has more than 300 employees. This bank specializes in offering all manner of banking services, and this includes issuance of loans, safe keeping of precious commodities, money transfer and forex exchange. All these areas have their own risks. Credit risk refers to a situation where a borrower may fail to pay a debt, in which he or she is obligated to pay (Olson and Desheng, 51). The risks involved in th is situation include a loss on the interest, and the principal amount given as a loan. Occurrence of this risk also causes a disruption in the cash flow of the bank, and an increase the costs of collecting the debts owed to the bank. Effectively reducing the occurrence of these risks, results to the success of the banking institution. This is because the bank’s main source of income emanates from interests it charges on the loans issued (Mehta, 28). To achieve success therefore, the Bank of Venus took an insurance policy to safeguard and protect itself from negative experience in case there was the emergence of risks associated with issuance of credit. However, the insurance company seeks to increase the following year’s premium. This will increase the operational costs of the banking organization; as a result, there will be a reduction of profits. This paper therefore seeks to identify and explain alternative courses of risk management practices that the bank can init iate. This paper also seeks to explain the various thought processes and analysis that the bank should take for purposes of choosing the alternative course of action. Alternative Risk Management Course of Action in Managing Credit Risk: The first alternative method of managing credit risks is referred to as risk based pricing. This is a method in which the bank will charge a very high interest rate to individuals who are most likely to default. Under this method, the bank will look into the credit rating of the individual, the purpose of the loan, and the loan to value ratio (Hopkin, 31). Other factors that the bank will look at before issuing the loan and calculating interests are the employment status of the borrower, the amount of loan under consideration, and the levels of documentation involved during the process of applying for a loan (Hull, 22). Under this method of risk management, the bank will calculate the rate of interest by analyzing the time value of the money, and als o estimating the probability of the borrowing defaulting on the loan. However, this form of managing credit risk has come under a lot of criticisms. One of the major criticism of this strategy emanates from consumers who are of the view that initiating this type of policy in managing credit risk makes it difficult for shopper to locate affordable interest rates from lenders/ banking organizations (Tarantino and Deborah, 12). This is because it is difficult for sho