MGT-521- 17386

Managing Dynamic Environment

Module 03: Analyzing the Need for Change in an Organization

100 pts

Student ID: G230003240

Abdullah Albakr

9/10/2024
 Introduction

Understanding organizational effectiveness and diagnosing areas that require

change are critical for maintaining competitive advantage and ensuring long-termsuccess.

Nadler and Tushman's Congruence Model offers a robust framework for analysing

organizational dynamics by focusing on the alignment (or congruence) between various

components of an organization. This essay will apply the Congruence Model to Al Rajhi

Bank, one of the largest financial institutions in the Kingdom of Saudi Arabia, to identify

necessary changes and evaluate the model’s limitations. Subsequently, we will apply

another organizational model from Chapter 3 to gain additional insights.

Nadler and Tushman's Congruence Model: Overview

Nadler and Tushman’s Congruence Model is based on the principle that

organizational effectiveness is determined by how well the components of the

organization fit together (Nadler & Tushman, 1997). The model includes several key

elements:

1. Work: The tasks and activities required to achieve organizational goals.

2. Formal Structures: The organizational chart, job descriptions, and formal roles.

3. Systems and Processes: The procedures, policies, and workflows that guide how

work is performed.

4. Informal Organization: The informal networks, cultures, and relationships that

influence behavior.

5. People: The employees and their capabilities, motivations, and interactions.

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The model assumes that for an organization to be effective, these elements must be

aligned or congruent. Misalignment can lead to inefficiencies, reduced performance, and

employee dissatisfaction.

Case Study: Al Rajhi Bank

Al Rajhi Bank, established in 1957, is a major Islamic bank operating in Saudi

Arabia and internationally. As of 2024, the bank has a significant market share in Saudi
Arabia and is known for its adherence to Islamic banking principles. Let’s analyze the
bank using the Congruence Model.

1. Work

Al Rajhi Bank’s core work involves providing financial services such as retail
banking, corporate banking, and investment services. The work is driven by the need to
comply with Islamic finance principles, which include Shariah compliance in all financial
transactions. The tasks include customer service, risk management, compliance checks,
and financial planning.

2. Formal Structures

The formal structure of Al Rajhi Bank is hierarchical, with a clear chain of

command from the CEO down to various departmental heads and employees. Key
departments include Retail Banking, Corporate Banking, Risk Management, IT, and
Compliance. The organizational chart is designed to streamline decision-making and
ensure effective supervision.

3. Systems and Processes

The bank’s systems and processes are critical to its operations. This includes a
sophisticated IT infrastructure for transaction processing, customer relationship
management (CRM) systems, and compliance monitoring tools. Processes are
standardized to ensure consistency in service delivery and adherence to regulatory
requirements.

4. Informal Organization

The informal organization at Al Rajhi Bank includes the internal culture,

unwritten norms, and informal networks among employees. The bank is known for a
culture that emphasizes Islamic values, integrity, and customer-centricity. Informal
communication channels and social interactions play a significant role in fostering
collaboration and innovation.

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5. People

Employees at Al Rajhi Bank are expected to have expertise in finance and a deep
understanding of Islamic banking principles. The bank invests in training and
development to ensure employees stay updated with the latest financial trends and
regulatory changes. Employee motivation is driven by career growth opportunities,
performance incentives, and alignment with the bank’s values.

Analysis of Congruence
Using the Congruence Model, we can assess the alignment between these

elements. For instance, if the bank’s systems and processes are outdated or not aligned

with the work requirements, it can lead to inefficiencies. Similarly, if the formal

structures do not support the informal organization’s culture, it can create friction and

reduce overall effectiveness.

Identifying What to Change

Based on the Congruence Model analysis, several areas for potential change at Al
Rajhi Bank are evident:

1. Updating Systems and Processes: To keep pace with technological advancements

and customer expectations, the bank may need to upgrade its IT systems and
processes. This includes investing in digital banking platforms and enhancing data
analytics capabilities.
2. Enhancing Formal Structures: With the expansion of services and geographic
presence, there may be a need to revisit the organizational structure to ensure it
supports efficient decision-making and communication.
3. Aligning Informal Organization: The bank should continuously assess its culture
and informal networks to ensure they align with its strategic goals and foster
innovation.

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 Limitations of the Congruence Model

While the Congruence Model provides a comprehensive framework, it has some

limitations in the context of Al Rajhi Bank:

1. External Environment: The model primarily focuses on internal congruence and

may overlook the impact of external factors such as regulatory changes, economic
conditions, and competitive pressures.
2. Dynamic Changes: The model assumes a stable environment, but in reality,
organizations face rapid changes. The Congruence Model may not fully capture
the dynamics of such changes..

Applying Another Model: The McKinsey 7-S Framework

To gain additional insights, we will apply the McKinsey 7-S Framework, which
includes seven elements: Strategy, Structure, Systems, Shared Values, Skills, Style, and
Staff (Waterman et al., 1980). This model complements the Congruence Model by
incorporating the concept of Shared Values and Style.

1. Strategy

Al Rajhi Bank’s strategy revolves around expanding its market share, enhancing digital
capabilities, and maintaining Shariah compliance. The 7-S Framework emphasizes the
alignment of strategy with other elements, such as structure and systems.

2. Structure

The structure of the bank, as previously discussed, supports its strategic objectives.
However, the 7-S Framework highlights the need for alignment between the structure and
the strategy to ensure effective implementation.

3. Systems

The systems at Al Rajhi Bank are crucial for operational efficiency. The 7-S Framework
suggests that systems should be aligned with the bank’s strategy and structure, which can
reveal additional areas for improvement.

4. Shared Values

Shared values in Al Rajhi Bank include adherence to Islamic principles and customer-
centricity. The 7-S Framework emphasizes the importance of aligning these values with
the strategy, structure, and systems to foster a cohesive organizational culture.

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5. Skills

The skills of employees are vital for achieving strategic goals. The 7-S Framework
encourages assessing whether the bank’s employees have the necessary skills and
capabilities to support its strategy.

6. Style

The leadership style at Al Rajhi Bank influences organizational culture and employee
motivation. The 7-S Framework highlights the importance of aligning leadership style
with the bank’s values and strategy.

7. Staff

The staff component involves evaluating whether the right people are in the right roles.
The 7-S Framework emphasizes the need for alignment between staff capabilities and
organizational needs.

Additional Insights

The McKinsey 7-S Framework provides additional insights by highlighting the

importance of Shared Values and Style, which the Congruence Model may not fully
address. Specifically:

 Shared Values: The 7-S Framework emphasizes the role of shared values in
driving organizational alignment. This can help identify gaps between the bank’s
stated values and its operational practices.
 Style: Leadership style and its impact on organizational culture are critical. The 7-
S Framework allows for a deeper examination of how leadership influences
employee engagement and organizational effectiveness.

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 Conclusion

Applying Nadler and Tushman’s Congruence Model to Al Rajhi Bank reveals

several areas for potential change, including updating systems, enhancing formal

structures, and aligning the informal organization with strategic goals. However, the

model’s limitations highlight the need for a broader perspective. The McKinsey 7-S

Framework provides additional insights into the role of shared values and leadership

style, offering a more comprehensive view of organizational dynamics. By integrating

both models, Al Rajhi Bank can better navigate its transformation process and achieve

sustained [Link] for a crew size of five, based on current trends,

suggests a total output of approximately 7580.85 square meters per day. These insights

are valuable for the owner of Maduro Cleaning in making informed decisions about crew

sizes to optimize operational efficiency and productivity.

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 References

-Nadler, D. A., & Tushman, M. L. (1997). Competing by design: The power of

organizational architecture. Oxford University Press.
-Waterman, R. H., Peters, T. J., & Phillips, J. R. (1980). Structure is not organization.
Business Horizons, 23(3), 14-26.