Models for Managing Change

Change is all around us. The past two years have made that abundantly clear. The ongoing Covid-19 pandemic has continually tested our resolve (personally and professionally), prompting us to adapt to meet an ever-evolving set of rules and regulations, whilst, at the same time, having to deal with wider socio-economic consequences.

From a regulatory perspective, we have seen the introduction of new rules and guidance in several areas, including the fair treatment of vulnerable customers, product governance and value measures, and, most recently, the new rules around general insurance pricing practices. More widely, the FCA has sought to encourage improved organisational culture within financial services firms, leading to many firms reflecting on internal policies, procedures and behaviours.

Beyond this, individual businesses will undoubtedly face their own unique challenges, which prompt the need to change, this can include mergers and acquisitions, restructuring, or making changes to the delivery of products and services.

Whatever it involves, change can be a disruptive, emotive and challenging time for all concerned. Therefore, it is wise for firms, and the agents of change, to follow a change management approach.

Change management is a methodical approach to the implementation of change, ensuring that lasting effects are realised. It considers the impact on the organisation and on the individuals and teams who work within it.

Managing and implementing change is not an easy task. It can be very sensitive and stressful both for the change manager and the people affected. Change management has a high risk of failure and, if not handled appropriately, can damage relationships between staff and managers.

A change manager has the difficult job of anticipating the impact that change will have on the organisation, its culture and processes, and the individuals concerned. The person implementing change may be a manager within the firm or they may be an external consultant, intended to bring an impartial and dispassionate perspective.

Various models have been developed to examine the issue of change management. There are many models of change but two of the most influential and enduring are those of Dr Kurt Lewin (1951) and Dr John Kotter (1996). These can be adapted or integrated into all sorts of organisations, including financial services.

Lewin’s ‘Unfreeze-Change-Refreeze’ Model

In what is known as the ‘Unfreeze-Change-Refreeze’ model, Lewin argued that organisations generally operate in a ‘frozen’ state. When faced with an obstacle or challenge requiring change, organisations can be ‘unfrozen’, altered in shape or size in order to meet the demands of a problem, and then refrozen into its new form.

Lewin argued that once an organisation has a motivation to change and accepts the need to change, it needs to begin the process of breaking down the status quo. If there are issues such as poor sales, a loss of income or negative feedback, it is clear that things need to change. The structure of the organisation, and possibly its culture, needs to be reshaped. This process will be disruptive and requires commitment and participation within the organisation to be achieved.

During the change phase the people within the organisation identify new approaches to a problem. It will be time-consuming and potentially divisive, as some people may be badly affected by the change. Good communication is essential for the change to be a success.

The refreeze stage involves embracing the change and forming a new status quo. It provides stability as staff have become confident with the new pattern of working and are given sufficient support and training.

Kotter’s Eight Step Process for Leading Change

Kotter’s model of change is more complex than the Lewin model and proposes an eight-stage process for implementing change:

  1. Establish a Sense of Urgency

Change needs to be necessary and urgent and believed to be so, otherwise people will avoid it.

  1. Create the Guiding Coalition

Change must be guided by a strong team to overcome resistance.

  1. Develop a Vision and Strategy

There needs to be a vision that people can work towards.

  1. Communicate the Change Vision

The vision needs to be communicated throughout the organisation.

  1. Empower Broad-Based Action

If things get in the way of achieving the new vision, they need to be removed.

  1. Generate Short-Term Wins

Aim to achieve early successes to keep morale high.

  1. Consolidate Gains and Produce More Change

Do not be complacent and ‘rest on your laurels’. Even if there are short term successes, you need to make sure that you don’t stop there.

  1. Anchor New Approaches in the Corporate Culture

For change to truly take place, the organisational culture will also need to change, otherwise the change is unlikely to last.

If change is rushed or poorly managed, the results can be disastrous. Not least, is the potential impact on staff, as the relationship between employer and employee can be sorely tested. Negative organisational cultures, distinguished by distrust and suspicion, can have a long-term impact on an organisation.

Taking a methodical and structured approach to change management can help firms achieve lasting and meaningful change. However, whatever approach is taken, it is important that there is strong communication and empathy throughout the process. People need to understand the need for change and how it will affect them. Strong leadership is required to clearly articulate the vision for this change and a skilled manager will be prepared to deal with the objections and resistance which often accompanies change.



Lewin, K. 1951. Field Theory in Social Science: Selected Theoretical Papers (ed. Cartwright, D). New York: Harper & Row.

Kotter, J.P. 1996. Leading Change. Harvard Business School Press, Boston, MA.

About the author

Nathan is a member of the senior management team at RWA and manages the company’s e-learning, content and professional standards department. He joined RWA as a content writer in 2016, on successfully completing his PhD. Nathan previously worked in the private, public and charitable sectors and has a broad range of experience, including research and analysis, project delivery, corporate governance, and team leadership.

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