Asset Management Corporation Of Nigeria

Published Date: 02 Nov 2017

1.0 Introduction

1.1 Background to the Study

Change is an essential part of any progressive society. To attain and maintain lead positions, businesses, organizations and forward-looking nations must be able to adapt to changes in all areas of endeavor. Change is constant (Disraeli, 1867), and is highly required for any sustainable success.

The term ‘change’ could be viewed from different perspective. Acas (2010) gathered that change can mean anything from the introduction of new training courses or company policies to new canteen facilities or travel arrangements. Change often alters daily routines, challenges organisational perceptions and necessitates reflection on how things are done. Change is usually characterised by a desire to improve things – whether it’s cashflow, products or processes.

A successful change process requires wide planning of the change process to involve broad stakeholders that would be affected by the change. In an organisation, these stakeholders include the employees, management staff, board members, clients and customers of the organisation.

Intense competitions in the market space, global economic crises, increase in the advancement of information and communication technologies (ICT) and strong desire of organisations to improve their efficiency, employee productivity and profitability are some of the reasons organisations carry out change projects. Kotter (2006) noted that the rate of change is not going to slow down anytime soon. If anything, competition in most industries will probably speed up even more in the next few decades.

The focus of this research is the Assest Management Company of Nigeria (AMCON) was established in 2010 to take over ‘toxic’ assets of banks and other organisations that were liquidated in Nigeria. AMCON was established via the Asset Managememt Company of Nigeria Act, 2010 to perform several functions. These include the acquisitions and sale of assets of liquidated banks and companies in Nigeria towards repaying investors and depositors whose investments and deposits were trapped in the liquidated organisations.

1.2 Research Problem

Generally, change could be positive, negative or neutral (Woodruff, 1995). However, change projects do not achieve their intended targets. The prevalence of failed change projects is so alarming that Strebel (1996) concluded that change management does not work as it should. This is due to results from the various surveys conducted on the success of change projects embarked upon in different organisations at different times.

The survey of 100 businesses across a broad cross section of industries conducted by the KPMG in New Zealand in December 2010 generated some startling results. According to the survey, 70% of organizations have suffered at least one project failure in the prior 12 months! The IBM, during its survey of 1,500 change management executives in 2008 observed that only 40% of projects met schedule, budget and quality goals. Lucey (2008) added that corporate re-engineering success rates in Fortune 1000 companies are below 50%.

It is out of the Author’s desire to test the validity of these results in Nigerian organisation and suggest steps towards reducing the fraction of failed projects that this project work has been embarked upon.

1.3 Aims and Objectives of Research

This research aims to critically examine the rate of success of change programmes carried out by the Asset Management Corporation of Nigeria (AMCON). The particular reference for this study is the Oracle Enterprise Resource Planning (ERP) software implemented by AMCON to improve her human resource, accounting and payroll processes.

To achieve this aim, the objectives are:

(i) To examine the challenges that led to implementation of the Oracle ERP Software at AMCON

(ii) Determine the success factors associated with change projects

(iii) Determine the rate of success of the Oracle ERP software and its impacts on the operations of AMCON

(iv) Proffer solutions to improve success rate in change projects

1.4 Research Questions

The research questions are as follows:

(i) What challenges that led to implementation of the Oracle ERP Software at AMCON?

(ii) What are the success factors associated with change projects?

(iii) What are the rate of success of the Oracle ERP software and identified impacts on the operations of AMCON?

(iv) What solutions could be implemented to improve success rate in change projects.

Chapter 2

Literature Review

2.1 Introduction

This section aims at review existing literature on the subject matter of change management and the success factors.

Change is a deliberate process, action or set of activities carried out to improve the state of activities in any business, organisation or nation; or to even adapt to a new environment. Although, change can be threatening and disruptive (ACAS, 2012), change is however crucial for any organisation, business or nation to gain increased patronage and relevant supports that are required for improved performance either in the market place or amongst comity of nations.

Change can be major or minor. Major change includes mergers and acquisitions, re-structuring or new working practices. On the other hand, minor changes include introduction of new training programmes, new organizational procedures, travel arrangements etc (ACAS, 2010). Change often alters what is done and how things are done within an organization.

Since change is inevitable process in every organization, it must be given conscientious attention to ensure that change achieve the desired outcome. Statistics have it that 75% of change programmes do not achieve its intended outcome (Eaton, 2010).

2.2 Change Management in an organisation

Kotter (1995) defines change management as the utilization of basic structures and tools to control any organizational change effort. The goal of change management is to maximize an organization's benefits and minimize the change impacts on workers and avoid distractions. Change management is the process that assures organizational structure, including employees, can handle changes and its effects. Change management entails proper and adequate planning, effective consultation and stakeholder engagement and sensitive implementation.

Managing change in any organisation is a project. Hence, there is the need to have a change manager that has adequate understanding of the change project and its effects, and would coordinate the change process and ensure all-round involvement and engagement of stakeholders

To assist the change managers achieve expectations of the change project, Roy (2011) provided a list of guidelines on how to approach organizational change. Some of which include the following:

Change Managers are to access and discuss the impact of change on various stakeholders.

Plan change such that stakeholders’ loss resulting from change outcome is minimized.

Consider that resistance could provide better alternative or a more appropriate cause of action.

Palmer and Dunford (2002) also identified six images of managing change that have embedded in them different ways of answering the question of whether change is manageable. The six images of managing change are explained as follows:

Change management as directing: this is premised on the belief that change outcome can be controlled and it is within the capacity of change managers to do so by taking deliberate management actions. There are a lot of multi steps models that are proposed by various authors with the aim of assisting change managers to direct change towards intended outcomes. The authors of some of the change models admitted that slight modifications could be necessary in the use of the models, they made it clear that all steps are necessary to achieve intended change outcome. Some of the common change models are Kirkpatrick (2001), Kotter (1965) 8 steps model and Leppitt (2006) integrated model.

Change management as navigating: this approach assumes that there is no simple prescription for managing transition since change is viewed as a continuous process that unfolds from the interplay of many variables ranging from political, context and consultation. The change manager must therefore navigate through this complex scenario by identifying the range of options available to gather and monitor information using the appropriate resources.

Change Management as Caretaker: this approach is based on assumption that organizational change is a natural occurrence and that organizations go through various stages to grow from birth to maturity and eventually death. This supports the life circle theory which states that "organizations pass through well-defined stages from birth to growth, maturity and then decline or death". On the basis of this theory change managers can at best be caretaker helping to smooth the process of transition rather than controlling it because in this case the factors that influence change are beyond the control of change managers.

Change Management as Coaching: this is an organizational development approach where it is assumed that change managers only serve as coach by helping to structure activities that help organization members to solve their own problems (French and Bell, 1995 cited in Palmer and Dunford, 2002). In this approach it is assumed that through planned interventions by top management that ripple on organizations processes, effectiveness and health (Rouda and Kusy, 1995 cited in Palmer and Dunford, 2002 ) change can be controlled.

Change Management as Interpreting: this is sense making activity which positions the change manager to give meaning to every change action and event in the organization. In this approach the change manager genuinely justifies the need for change and every step taken in the change implementation process. The interpretation of change given by change managers must be effectively communicated to organizational members to reduce the impact of other competing meanings (not genuine) to change on change outcome.

Change Management as Nurturing: this approach is based on the assumption that change managers cannot control the outcome of change. Future outcomes can be shaped but not necessarily controlled. Change managers can however nurture their organizations, facilitating organizational qualities which enable positive self organizing to occur.

2.3 Factors responsible for change outcomes

Sirkin, Keenan and Jackson (2005) studied 225 companies to find out what they called the hard factors that are responsible for change outcomes which they said are different from soft issues such as culture, leadership and motivation. The study showed positive correlation between change outcomes and four key factors tagged "DICE". Components of DICE are indicated below:

"D" stands for duration, which is the time between project reviews. What determines whether projects fail or succeed is not the time taken to complete projects but rather the time between project reviews.

"I" stands for Performance Integrity. This factor has to do with the quality of the implementation team. Companies must release their best hands to participate in change initiatives.

"C" stands for commitment. Success or failure of change is determined by the level of commitment demonstrated by employees and executives of organizations.

"E" stands for incremental effort employees must make during the transformation. Project team members will still have to cope with their day to day work schedules. The rule is not to allow anyone’s work load to increase beyond 10% as a result of the change initiative.

Sirkin, Keenan and Jackson (2005) noted that change managers must fully address the "DICE" factors for successful change implementation.

The ultimate objective of change projects is to ensure that change achieves the intended outcome. In same vein, the work of Sirkin, Keenan and Jackson (2005) attempts to establish the link between change outcomes and some hard factors. Invariably, Sirkin, Keenan and Jackson (2005) noted that the attention given to these factors termed "DICE" will dictate the direction of change outcome. The DICE theory is based on the assumption that change is within the control of change managers and the theory also supports some of the images of change such as change manager as a director, change manager as a navigator and change manager as a coach. These images of change assume that through planned interventions by top management that ripple on organizations processes, effectiveness and health change can be controlled (Rouda and Kusy, 1995).

In addition, Palmer and Dunford (2002) reviewed the effects of change outcomes and came up with a model based on images of these outcomes and images of managing. Palmer and Dunford (2002) identified three types of change outcomes; they are, intended, partially intended and unintended.

In their definition, Palmer and Dunford (2002) explained intended outcome as the "realization of prior intent through the action of managers". But in situations where not all intended outcomes are achieved, Palmer and Dunford (2002) called such change outcome "partially intended". The third type of change outcome as identified by Palmer and Dunford (2002) called "unintended outcome" was defined as the unplanned change outcome that evolve based on the assumptions that change is external and beyond the control of change managers.

2.4 Resistance to change in an organisation

Different writers have labeled resistance to change a "brickwall and a dangerous roadblock to transformation". Roy (2011) took a different perspective to resistance to change. In his study, Roy (2011) identified some common assumptions about resistance to change. He examined some organizations that have under gone change with a view to ascertaining whether those assumptions were valid during their transformation programmes or not.

Roy (2011) reviewed 3 common assumptions of resistance to change and concluded thus:

1. "Resistance is contrary to organizational interest": Roy (2011) noted that in some cases employee resistance indeed prevents organizations from making costly mistakes. Roy (2011) mentioned the proposed merger of Auckland University and Unitec that was truncated due to employee opposition but later discovered that Auckland University would not have benefited from merging with a polytechnic with different resources, history and reputation.

2. "People resist organizational change due to selfishness": Roy (2011) also noted that even when it is natural for people to resist change in situations where they feel they will suffer loss such as poorer working condition, lower remuneration, lower status etc they may as well resist change out of concern for others. He remarked that some of his respondents said they had empathy for some of their team mates. Additionally, Roy (2011) observed that people resist change when the process and how change is implemented is unsatisfactory. Roy noted that, during the study, a respondent lamented that during major restructuring in his firm, "things were taken too far. Too many people were taken out. Too many mistakes were made".

3. People resist all changes: Roy (2011) further noted that people resist changes when they anticipate loss but that it is not in all cases that people lose from the change. Roy (2011) went further to say that many of those he interviewed accepted change partly because they got personal gains and partly because change led to increased organizational effectiveness.

2.5 Steps for Leading Change

John P Kotter, an American born in 1947, is a Harvard Business School professor and leading thinker and author on organizational change management. In his highly regarded books 'Leading Change' (1995) and the follow-up 'The Heart of Change' (2002), Kotter described eight-step change process in his 1995 book, "Leading Change." These processes are indicated below:

Step 1: Create Urgency

Kotter noted that for change to happen, it helps if the whole company really wants it. He added that there is need to develop a sense of urgency around the need for change as this would spark the initial motivation to get things moving.

Action points- to achieve step 1, the organisation needs to conduct analyze the Strength, Weaknesses, Opportunities and Threats (SWOT) of the organisation to:

Identify potential threats and challenges, and develop scenarios showing what could happen in the future.

Examine opportunities that should be, or could be, exploited.

Start honest discussions, and give dynamic and convincing reasons to get people talking and thinking.

Engage other stakeholders such as customers, investors, etc.

Step 2: Form a Powerful Coalition

Kotter noted that for change to be successful, 75 percent of a company's management needs to "buy into" the change. This step requires strong leadership and visible support from key people within the organization.

Action points- to achieve step 2, the organisation needs to:

Identify her true leaders

Ask for an emotional commitment from the leaders so identified.

Work on team building

Check the team for weak areas, and ensure mix of people of different backgrounds and experiences

Step 3: Create a Vision for Change

Kotter observed that many great ideas and solutions float around at the initial stage of the change process. He noted that there is need to link the concepts to an overall vision that employees and stakeholders in the organisation can grasp easily and remember.

Action points- to achieve step 3, the organisation needs to:

Identify the values that are central to the change.

Develop a short summary that captures what you "see" as the future of the organization.

Create a strategy to execute the vision.

Ensure that the change coalition can describe the vision within a short period

Step 4: Communicate the Vision

Kotter noted that what is done to the vision after its creation determines success. He added that there is need to communicate the vision frequently and powerfully, and embed it within everything that is done within the organisation.

Action points- to achieve step 4, the organisation needs to:

Talk often about the change vision.

Openly and honestly address peoples' concerns and anxieties.

Apply vision to all aspects of operations – from training to performance reviews. Tie everything back to the vision.

Lead by example.

Step 5: Remove Obstacles

At this stage, Kotter recommends that the organisation puts in place the structure for change, and continually check for barriers to it. He noted that removing obstacles can empower the people needed to execute the vision, and it can help the change move forward.

Action points- to achieve step 5, the organisation needs to:

Identify, or hire, change leaders whose main roles are to deliver the change.

Look at the structure, job descriptions, and performance and compensation systems to ensure they align with the vision.

Recognize and reward people for making change happen.

Identify people who are resisting the change, and help them see what is needed.

Take action to quickly remove barriers.

Step 6: Create Short-term Wins

At this stage, Kotter recommend the creation of short-term targets – not just a long-term goal. He noted that the change team may have to work very hard to come up with the targets, but each "win" that is produced can further motivate the entire staff.

Action points- to achieve step 6, the organisation needs to:

Look for sure-fire projects that can be implemented without help from any strong critics of the change.

Avoid early targets that are expensive. Hence the need to be able to justify the investment in each project.

Thoroughly analyze the potential pros and cons of the targets.

Reward the people who contribute in meeting the targets.

Step 7: Build on the Change

Kotter argues that many change projects fail because victory is declared too early. He observed that real change runs deep and quick wins are only the beginning of what needs to be done to achieve long-term change.

Action points- to achieve step 7, the organisation needs to:

Analyze what went right and what needs improving especially after every win.

Set goals to continue building on the momentum achieved.

Learn about the idea of continuous improvement.

Keep ideas fresh by bringing in new change agents and leaders for change coalition.

Step 8: Anchor the Changes in Corporate Culture

Kotter noted that finally to make any change stick, it should become part of the core of the organization. He added that organizational culture often determines what gets done, so the values behind your vision must show in day-to-day work.

Action points- to achieve step 8, the organisation needs to:

Discuss progress and success stories attributable to the change at every opportunity given especially in engaging stakeholders.

Include the change ideals and values when hiring and training new staff.

Publicly recognize key members of the original change coalition.

Create plans to replace key leaders of change as they move on. This will help ensure that their legacy is not lost or forgotten.

2.5 Factors that lead to failure of change projects

Closely related to the topic for this dissertation is the work of Lucey (2008) which was done with the aim of examining why the failure rate for organizational change is so high. Lucey (2008) threw the question to three groups of highly experienced professionals in an interview. The interviewees include consultants that have worked exclusively on major change programmes, the academic world and writers on organizational change. The groups were asked to answer the question as they relate to the three stages of change behavior identified by Lewin (1951) cited in Burnes (2004). The three stages of change behavior enumerated by Lewin (1951) cited in Burnes (2004) are unfreezing, movement/change and the refreezing stage. The unfreezing stage is the beginning stage that Lewin (1951) cited in Burnes (2004) believed that the equilibrium of human behavior must be destabilized through awareness campaigns for the need for change. The movement stage was defined by Lewin (1951) cited in Burnes (2004) as the actual period of change implementation while the refreezing stage is a period to measure the impact of change against intended change outcome in order to sustain change.

The answers provided by the groups for each stage of change are ranked in line with the number of support for the answers. At the end of the exercise the research results show that lack of vision and leadership, poor communication strategy and failure to create a sense of urgency are part of the reasons for failure of change programmes at the unfreezing stage. The reason for failure at the movement stage are non deployment of structured methodology and project management, non availability of fully mobilized change champions and absence of dedicated and full resourced implementation team among others. And at the refreezing stage the reasons deduced from Lucey (2008) cited in Burnes (2004) research include non monitoring and evaluation of change outcome and failure to engage employees.

To conclude, Lucey (2008) cited in Burnes (2004) compared the results of his research with two acclaimed theories on organizational change, Kotter (1996) and Alexander (1985) and he was able to validate those theories with the outcome of his research.

It is the researcher’s assumption that if the factors that lead to failed projects are known then by implication change projects will be successful where these factors are consciously avoided. This research work will test the validity of the conclusion of Lucey (2008) by examining whether the factors responsible for failed change projects as identified by Lucey (2008) are present or not in the processing of change implementation in Asset Management Corporation of Nigeria (AMCON).

2.6 The Asset Management Corporation of Nigeria (AMCON)

As indicated on its website amcon.com.ng, the Asset Management Corporation of Nigeria (AMCON) was established on the 19th July 2010, when the President of the Federal Republic of Nigeria signed the AMCON Act into Law.

AMCON was created to be a key stabilizing and re-vitalizing tool established to revive the financial system by efficiently resolving the non-performing loan assets of the banks in the Nigerian economy. Consequently, the organisation is mandated to:

Soak up non-performing loans

Avert loss of depositors’ funds, instability and threat of collapse of the banking subsector in the country.

Acquire Eligible Bank Assets (EBAs) from Eligible Financial Institutions (EFIs) at a fair value and put these assets to economic use in a profitable manner. AMCON’s acquisition will help Eligible Financial Institutions ( EFIs) to free up resources for more profitable activities and improve capital position.

2.6.1 Mission of AMCON

To positively assist the economy of Nigeria by;

Complementing the recapitalization of affected Nigerian banks;

Providing an opportunity for banks to sell off Non Performing Loans(NPLs);

Freeing up valuable resources and enabling banks focus on their core activities.

To get banks lending again to real sectors of the economy

2.6.2 Organizational Structure

AMCON is managed by a board headed by the Chairman. Other members of the board include the Managing Director/Chief Executive Officer, Executive Directors and Non-Executive Directors. The current board chairman is Aliyu Kola Belgore, OFR.

AMCON has 3 basic departments in its operations. These are:

Credit Department- involves loan management, loan administration, strategic accounts

Operations and Finance- involves business process management, human resources, information technology, finance and budget, operations, administration.

Asset Management- involves property management, projects, listed securities and IT processes.

The head of head of these departments report directly to the managing director. Other units that also report to the managing director are- Audit and Compliance, Risk Management, Company Secretary, Legal Adviser and Corporate commission.

2.6.3 Subscriber Analysis

The subscribers’ holding pattern of AMCON as at 31 December, 2010 is as stated below:

Capital Range

Subscribers

Percentage Holding

No of Holdings

0-5,000,000,000

Central bank of Nigeria

50%

5,000,000,000

0-5,000,000,000

Federal Ministry of Finance

50%

5,000,000,000

Source: AMCON Annual Report for the period ended 31 December, 2012

Financial Performance

AMCON recorded a loss of 55 Million Naira in the year 2012. As part of its efforts to improve performance, employee productivity and increase profitability, AMCON implemented the Oracle ERP project between 2011 and 2012. Hence, this research aims to examine the impact of this change initiative on the performance, employee productivity, profitability and other indices within the organisation.

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Introduction

This study is aimed at evaluating the success factors attributed to the change project embarked at the Asset Management Corporation of Nigeria (AMCON). To do this study has raised four questions to be answered:

(i) What challenges that led to implementation of the Oracle ERP Software at AMCON?

(ii) What are the success factors associated with change projects?

(iii) What are the rate of success of the Oracle ERP software and identified impacts on the operations of AMCON?

(iv) What solutions could be implemented to improve success rate in change projects.

To determine the appropriate answers to these questions, both primary and secondary data will be used in the study.

3.2 Methods of Data Collection

The focus of this study is AMCON. Information utilized in the study were gathered through:

(i) Interview of top management staff and consultants that implemented the Oracle ERP Project

(ii) Design and administration of questionnaire to staff in the organisation

(iii) Theoretical background information was gathered through review of related literature on success factors.

3.3 Research Instrument

The major research instrument to be used is the questionnaire. The questionnaire designed by the researcher and used in this study contained structured questions that were scientifically formulated to meet the stated goals of this research. To facilitate the ease and convenience of filling the questionnaire, the research gave it directly to the respondents. Respondents were carefully selected and a brief chat held with the respondents to enlighten them about the importance of the study and the need for them to provide the information as accurately as possible.

The following are the assumptions made about the questionnaire; that the respondents voluntarily and honestly answer the survey questionnaire, the selected customers are competent to answer the survey questions and answers to the questions given without external influence.

3.4 Validity of the Instrument

Both face and content validities of the research instrument were ensured and assessed.

3.5 Sample Frame

Sample frame refers to the entire population in a research study. Currently, AMCON has a total of 200 staff on its payroll. Consequently, the sample frame for this project is the 200 staff.

3.6 Sample size

Fifty (50) percent of these staff was included in the sample. This gave of total 100 respondents.

3.7 Sample Technique

To ensure that every respondent is given equal representation in this study, the simple random sampling technique was adopted for the administration of questionnaires. The questionnaires were then administered on one out of every two staff in each department. This represented 50% of the sample frame thereby amounting to a total of one hundred (100) respondents. It is expected that the opinion of the respondents would be a fair representation of staff in the organisation. Some of the respondents who could not fill their questionnaires immediately were allowed to hold the questionnaires and return the following day. Of the 100 questionnaires administered, 93 questionnaires were retrieved representing 93% of the total questionnaires. The remaining 6% were either misplaced by the respondents on whom it was administered or improperly filled.

3.8 Data Analysis Technique

The data collected by administering the questionnaire were analyzed using the Statistical Package for Social Sciences (SPSS). Both descriptive statistical tools will be utilization to meet the research goals.

Descriptive tools used include frequency tables, bar-diagrams, line graphs, mean, standard deviation, etc

Inferential statistical tools establish the relationships that exist between or within variables so as to allow for comparison and inferences. The tools used in this category include chi-square.