Towards branch-free financial sector? : Employees' sensemaking of commitment to change

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1 UNIVERSITY OF EASTERN FINLAND Faculty of Social Sciences and Business Studies Business School

TOWARDS BRANCH-FREE FINANCIAL SECTOR? -

EMPLOYEES’ SENSEMAKING OF COMMITMENT TO CHANGE

Master's Thesis Tiina Ukkonen, 274598 May 17, 2018

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2 Abstract

UNIVERSITY OF EASTERN FINLAND Faculty

Faculty of Social Sciences and Business Studies

Department

Business School

Author

Tiina Ukkonen

Supervisor

Esa Hiltunen

Title

TOWARDS BRANCH-FREE FINANCIAL SECTOR? – EMPLOYEES’ SENSEMAKING OF COMMITMENT TO CHANGE

Main subject

Innovation Management

Level

Master

Date

May 2018

Number of pages

75

The purpose of the study is to explore digitalization of the financial sector and its employee’s commitment to it in a case company Nooa Savings Bank. The whole banking industry is going through digitalization changes, especially the daily banking services are under the most challenging part because banks should think how to advance the digitalization with their systems and therefore this has raised a new world issue.

The study aim is to answer how employees of financial sector make sense of commitment to change and how employees’ see the change in this specific case company. The study is made by holding interviews with the help of one case company to investigate its current situation and company’s employees’ feelings and experiences towards change. The chosen research strategy is explanatory case study. The theoretical framework of this study is based on theory of sensemaking and key elements of digitalization in the financial sector. Both literature and electronical sources were used in the theory part.

In the empirical part of thesis, data was collected by using semi-structured interviews and interviews were hold with the employees of the case company. This study contributes to academic literature through addressing a gap in research by studying employees’ perspective and current attitude, expectations, fears, implications about the fast-changing digitalizing financial sector and how they commit to digital change.

The results show that answers varied a lot each other even though employees are facing the same change.

They highlighted motivational and negatively affecting factors and how they describe the change in the field. However, employees are aware about the change but at the same time recognized the lack of knowledge of the colleagues. The sensemaking theory was ideal to describe the feelings and attitudes of employees and the sensemaking process however overall was identified in the data. Throughout the interviews it was clearly visible how the commitment can be achieved by utilizing sensemaking framework and the results shows that positive attitude plays key role and renewals are faced with strong mo- tivation. The change in the sector is continuing and employees must follow the upcoming changes.

Therefore, social in results was found to be the important and motivated things in the change. Priceless support from other colleagues and supervisors was found playing key role inside the work community.

Finally, managerial implications are made regarding theoretical discussion and findings.

Key words: sensemaking, commitment to change, digitalization, case study research, semi-structured inter- views

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Tiedekunta

Yhteiskuntatieteiden ja kauppatieteiden tiedekunta

Yksikkö

Kauppatieteiden laitos

Tekijä

Tiina Ukkonen

Ohjaaja

Esa Hiltunen

Työn nimi

KOHTI MUUTTUVAA FINANSSIALAA? – MUUTOKSEEN SITOUTUMISEN JÄRKEISTÄMINEN TYÖNTEKIJÖIDEN NÄKÖKULMASTA

Pääaine

Innovaatiojohtaminen

Työn laji

Pro Gradu-tutkielma Aika

Toukokuu 2018

Sivuja

75 Tiivistelmä

Tutkimuksen tarkoituksena on selvittää finanssialan työntekijöiden näkemyksiä muutoksesta, kuinka he järkeistävät työhönsä kohdistuvaa muutosta. Tutkimus on toteutettu käyttäen laadullista tutkimusmenetelmää selvittäen työntekijöiden sitoutumista muutokseen (käsitykset, olettamukset ja pelot muutosta kohtaan) ja tarkastella järkeistämisen ja sitoutumisen välistä yhteyttä. Tutkimuskohteena eli tapausyrityksenä finanssialalta on Nooa Säästöpankki.

Digitalisaatio finanssialalla on suhteellinen nuori ja vähän tutkittu tutkimusalue. Työntekijöiden näkemykset muutoksesta ovat tutkimuskirjallisuudessa jääneet taka-alalle ja tutkimustietoa on vähän.

Näin tämä tutkimus tuo lisätietoa digitalisaatiomuutoksesta erityisesti työntekijöiden näkökulmasta.

Tutkimuksen teoreettisena viitekehyksenä on käytetty Weickin luomaa sensemaking-lähestymistapaa ja ilmiötä tarkasteltu teorialähtöisesti seitsenkohtaista ulottuvuuden kautta löytääkseen avaintekijöitä jotka sitouttavat työntekijät muutokseen. Tutkimusdata kerättiin viiden puolistrukturoidun haastattelun avulla.

Valittuna tutkimusstrategiana on selittävä tapaustutkimus.

Tutkimustulosten mukaan työntekijöiden näkemykset muutoksesta ovat hyvin erilaisia, mikä korostaa yksilöllistä ulottuvuutta muutokseen sitoutumisessa. Tulokset osoittavat, että muutokseen suhtaudutaan positiivisesti ja korostaa työntekijän oman motivaation suurta merkitystä. Sitoutumiseen liittyvinä haittaavina tekijöinä tutkimuksessa nousi erityisesti vanhemmat kollegat (asenteet muutosta kohtaan).

Tulokset osoittavat, että vaikka muutosta oli vaikea hahmottaa alkaneen tiettyyn aikaan, ei tehnyt siitä haastavaa kuvailla, mutta teki järkeistämisestä jatkuvaa. Tilanteeseen liittyvä toiminta auttaa hahmottamaan jo olemassa olevaa tietoa ja aikaisempien kokemusta yhdistämistä yhdeksi isoksi prosessiksi. Muutos koettiin hyvänä asiana, koska omilla pienilläkin teolla koetaan olevan merkitystä.

Suurimpana haasteena kuitenkin nähdään tulevaisuus ja sen tuomat haasteet; vaikka fyysistä paikkaa ei olisi, niin sähköisten kanavien kautta tapahtuma kommunikointi ei tule korvaamaan kasvokkain tapahtuvaa kohtaamista samalla tavalla.

Voidaan todeta, että tutkimuksessa käytetty järkeistämisprosessi sopii kuvailemaan työntekijöiden suhtautumista muutokseen. Vaikka tutkimus kohdistui työtekijöihin, tutkimuksen lopussa otetaan kantaa myös johdon osallisuuteen muutosprosessissa. Lopuksi teoriaa tukevat johtopäätökset on esitetty keskustelun ja löydösten avulla.

Avainsanat: järkeistäminen, sitoutuminen muutokseen, digitalisaatio, tapaustutkimus, puolistrukturoidut haastattelut

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Digitalization is a new modern world trend and it can be said to have started in the beginning of 1980’s, when home computers came more popular and available to discard rest consumers, which enabled new channels for consumers to contact people around to globe but same time aware issues around the world than ever before. Advanced technology nowadays has opened a new world for consumers around the world and barriers are removed from the modern society. It is not anymore depending on time, space, data acquired and involvement. Has allowed a situation where the openness is a crucial part, and everyone can connect to other people unmindful of time and current situation. (Koiranen, Räsänen and Södergård 2010, 24-29.)

One of the raising trends nowadays is to bring to consumers online banking services instead retail services. Internet based banking includes several service types online platforms without physical location which consumers can request information and take care of their own needs. (Daniel, 1999; Mols, 1998; Sathye, 1999). According to Aladwani (2001) there is available currently three types of banking styles; which are internet-based banking platforms, services with dial-up connections, or extranet which is a private network meant to be used between a bank and corporate customers. Conger and Mason (1998) has suggested that digitalization is a process of three generic stages, pre-development, development, and post-development. During the research process there is available and recognized only few if any studies which have examined the issues related to digitalized banking (Aladwani 2001). Afterwards these issues have been realized more and more but still the field is not yet studied a lot nowadays.

Banking services is something, what everyone has and needs regardless of the user's age.

Therefore, there should be available as much bank branches, and employees as there is customers. Everyone needs same kind banking professional to their life. This is one of the reason which raised the interested towards topic and gave the purpose to investigate the

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change process and commitment to change in the field of finance, and how employees can commit to current change.

The rapidly changing world needs renewals and in especially in the field of banking. The field is seeing as old-fashioned and stopped. But the real question is, if the field changes can the employees’ change along it. The managers usually do not see the failure here, they are too eager with the changes and renewals thus they forgot their biggest strength, employees. They are left behind in these situations. They must manage by themselves through the hardest rock and follow the given instructions even they need personal and individual guidance.

Moreover, the change process in total is too wide itself for this study thus the research is restricted to concern only digitalization phase in the field. Also, this study wants to investigate how employees can make sense of the change in their own way and how they interpret it. It was noted that employees must put more effort from their own side than managers, since without employees’ company cannot operate. Moreover, the field is changing rapidly and continuously, this study concentrated only on one case company. Most of the studies done in the field are mainly focused on the management level (e.g. van Vuuren and Elving, 2008; Lüscher and Lewis, 2008; Balogun, 2006; Fiss and Zajac, 2006; Rouleau, 2005).

Therefore, this gap gives interesting opportunity to study with this subject from perspective of employees, as stated before that voice of employees is rarely heard in the context. This study could be beneficial to take a look to company’s future because this will bring out individual employee’s voice which usually is not heard since it has been studied less than managerial level.

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8 1.2 The purpose of the study

This thesis concentrates to understand the sensemaking process that employees go through when committing to digital change. This study is implemented with one case company in Finland and investigating the stage of employee’s sensemaking of commitment to change.

The study aim is to understand the perspective and experiences of employees in the context of digitalization in the financial sector. The knowledge towards current situation inside the company can be increased and shared with them and recognize how they experience the change process and what are the factors affecting employees’ commitment. Thus, study aims to seek the answer based on the purpose and the goals of the study, the main research question is formulated as follows:

“How employee of banking sector makes sense of the digitalization change?”

This type of question helps to understand more deeply especially in this context the commitment of employees to change. It helps to describe how the employees see the change and how they emphasize it. Some objectives are formulated in order to answer study’s research question. In the context of committing to change the objectives are to investigate the process of sensemaking. Goals of the study also include the examination of the journey of commitment and to name used factors during the process and describe the ways how employees are committed to change.

Usage of sensemaking process in this study will give the wider and richer understanding of the elements used in the process and seeking the factors which are influencing to commitment of the employees. This part will be done by building a theoretical framework around sensemaking theory and within this tool to analyse the commitment level of employees.

From sensemaking process and the employees in the financial sector gives contribution to study this phenomenon. Sub-question is also formulated to support main research question to figure out the current situation. The sub-question of the study is following;

“How employees commit to the digitalization in the banking sector?

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This sub question will be answered also shortly in the end of the study. Furthermore, this specific study is a guide to the change which has taken place inside a company. Therefore, in this specific company, this study will help in evaluating the change process and its success.

The goal of the study is to investigate the commitment of employees to change in the financial sector. The interviewees for study were chosen with the help of case company. Finan- cial sector is changing now and beyond, and nobody cannot forecast how it will be in next ten years, and within these next ten-year the whole field is going to change more than in 100 years together. Every business needs to be digitalized and hear the needs of consumers who have the demand. The future is unclear in the field of financial sector in the light of digitalization, but it does not mean the industry is rigid. Digitalization means renewal. Nev- ertheless, nobody knows how the bank of the future will look. Including to this study employees’ perspective and how they see themselves as a vital part of journey, therefore some suggestions and implications will be discussed in the end based on results.

Thus, based on this preliminary theory available seems that more research is needing to achieve better understanding about this context. This thesis aims to combine theory available by studying commitment to change from the perspective of employees. Along the process examined, the thesis introduces the factors affecting to successful change process as well in this specific company.

The results of the study will have an important role not either to the company's future but also as usage for future managers and for the existing literature. This study could help future managers implement future changes better and understand the perspective of employee’s how they see the change. Furthermore, this specific study will take a place inside the company to examine the current change and the situation of the employees; it will also help to evaluate the change process and its success.

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10 1.3 Case Company Nooa Savings Bank

An empirical context of this research is a Finnish Savings Bank called Nooa Savings Bank, which is part of Savings Bank Association, and it was established in 1906 (Säästöpank- kiliitto, 2015.) More specific Nooa Savings Bank was established in May 2003 to Helsinki metropolitan area (Säästöpankkiliitto, 2015.). They have six branches in the area. More is coming though they put now effort branch free offices and employees with no location and office. Even during these years, the bank has closed but also opened new branches and divided people to different branches with their experience and needs. People had own willingness to affect where they want to locate, but in the end, it depends what the business needs. The empirical part of the Thesis will be conducted with this case company. The bank is limited company, which differs from other savings banks, and it is fully owned by other savings banks in Finland. (Säästöpankkiliitto, 2015.) There are total of 23 savings banks in Finland, and Nooa is only one which operates in Helsinki area. Nooa Savings bank was established because there was no Savings Bank in the Helsinki metropolitan area. The need was urgent. The consumer needs were answered and the Nooa bank was ready to be established. They started with many branches which nowadays do not exist anymore, but in the other ways the bank is growing and arising. (Nooa Säästöpankki, 2017)

Nooa has now new CEO who has taking the charge to lead the bank to success. He has exact aims where and how to go, slightly ahead of competitors. The bank is now concentrated more and more putting effort to personal customer service and the quality of the service. They are listening what consumers are saying and trying to follow this voice as its best way. The key of their business is that they go where their customers want their banking business to be, was this place then a home or a cafe. It is a high time for banks to change the world in a more human and more flexible way. (Nooa Säästöpankki, 2017)

Nooa Savings Bank serves its customers in addition to branches, at home, in the workplace, on the phone or in the internet – wherever it is best for the customer. This kind of approach

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has led to a slightly different growth strategy: in a situation where the most competitors reduce the number of their staff, Nooa has steadily increased the number of the employees.

Nooa believes that digitalization of services will require more pervasive analogue better known as face-to-face encounters between customers and banks. With this approach, Nooa aims to be a leader in year 2018. (Nooa Säästöpankki, 2017)

Writers own interest towards financial sector arises from her previous work experience in the field and this enabled chosen of the topic and eventually to end up make a thesis about it. There are available a large amount of studies from the managerial and change management point of view but not in this specific context since the digitalization change is quite new concept and therefore gap needs to be filled.

The results of this study will have an interesting contribution to provide new insight and comparison to the existing literature. This was found thorough the gap which will allow conducting this kind of study. Study’s results may give to future managers a new insight how to lead employees to achieve better outcome but also give some different aspects about existing change. Furthermore, this study will play as a forerunner to the company and hop- ing it will take its place inside the company and will provide practical help and guidance to see some things differently. Hopefully this study will help in evaluating and guiding the change process and help to understand employee’s feelings in the process.

1.3 Key concepts of the study

The key concepts of the study include such as financial sector, sensemaking, commitment and digitalization. When introducing shortly these key concepts, it will help to understand phenomenon better while reading this study. The aim is to describe the linkage between existing literature and the current change process. All these concepts constitute a sufficient basis for empirical study.

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Financial sector plays a crucial role of the thesis since the case company operates in this specific field. Financial sector is itself is huge and it have many operators, but study will be made with help of one case company. This study will give a description of the current situation inside the company. Nowadays every operator has implemented different kind of internet-bank projects aiming to achieve competitive advantage to separate from others successfully. (Shah and Siddiqui, 2006). Every operator has their own strategy how they achieve the best outcome. Basically, in the field must be smart enough to hold on the competition in the rapidly changing field (Miles and Snow, 1994.)

Weick (1995) explained the concept of sensemaking, as it is a way which gives a multidi- mensional overview to investigate organizational change with individual level. As a context, sensemaking, does not offer only theory to support study and interpreters whereas it is more a framework, which gives opportunity to look changes differently (Maitlis and Chrstianson, 2014). According to Balogun and Johnson (2004), sensemaking is synthesis of written or spoken language and storytelling. Weick's (1995) theory of sensemaking is originally about when people create meanings of for their life and makes sense what is going on, therefore it is required to base these meanings on their interpretations and all the collected cues. These past life cues are mainly collected from the people’s actions, activities, experiences and meanings of their everyday life and from any part of their previous life. Weick (2005) slightly advanced this theory being as a part when he wanted to recognize what kind of a role of the interplay and actions has a part of change and how to interpret in organization works. Overall, sensemaking is made for helping to solve problems, make decisions, planning future scenarios end eventually execute plans with it (Zhang and Soergel, 2014).

From general aspects, basically sensemaking is a synthesis of organized things and meaning introduced together as a common meaning. Theory is good when individuals and group of people aim towards common goal and create new innovations through this process. (Maitlis and Christianson, 2014). When doing something together, sharing the meaning will become vital part for them. When looking from perspective of top to down of implementing change project it could be a bunch of activities, where during the change process and from the very

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beginning a participation and support from each other are playing essential role. According these interprets; the research is focusing on more individual level sensemaking of employees.

Commitment. According to Meyer and Herchovitch (2001, 299), the concept of commit- ment is based on definition as following: “a force that tie up individual to a course of action of relevance to a target” and that it “can be accompanied by different mind-sets that play a role in shaping behaviour”. This gives a thorough description that commitment is a “mind- set” and it has three different categorizations: commitment to the organization, realize the costs of leaving and engaging to remain. These entire three can then divided as a road of commitment such as affective commitment, continuance commitment and normative commitment. Usage of these concepts will give the best picture of this area and insight how the employees are defining themselves and how they are describing the current change with their own words.

Digitalization is defined as a driving force how company should increase the productivity of their digital technologies to succeed in their business. It helps to ensure and maintaining profitability, preserve jobs and promote employee wellbeing. Also, digitalization has helped when creating new products and develop advanced and better working methods in the field. (Pohjola, 2015.). One of the arguments are that literature shows digitalization has been described to be greater step than Internet overall (EY, 2011).

1.4 The structure of thesis

The structure of this thesis is based on the following guidelines: theory, research method, analysing part, results and conclusions. The first part of the thesis introduces the topic overall. After this, the purpose will take a place, aims and objectives were introduced and key concepts announced. The following chapters of the thesis introduce the theory part and research methods used. Finally, findings and conclusions of the study will follow as a last part.

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Theory part will start the thesis as an introduction of the key concepts which was presented previously. After this will follow theoretical part and it is about how the study is done with the usage of case study method and semi-structured interviews. Study continues with empirical part where the data collected and how the sensemaking theory fits here and how the theory can meet practical part.

Chapter two discusses about the literature of sensemaking and digitalization, the main key concepts. The section will first talk about the basic theory available and related to study and will be followed by a discussion of sensemaking and its themes. In this part, it is including also discussion of technological part of daily banking services and usage in the field.

Chapter three introduces a methodological approach which has been chosen to conduct the study. The section involved research methodology and the context. Furthermore, data collection method is introduced next and the analysis of the data and ethical thinking are included as well.

In chapter four present the results of empirical research. It will introduce general findings regarding the change and commitment is introduced. After this part, the results are divided in to themes according to sensemaking dimensions.

Finally, chapter five have conclusion of the study. This part brings out the empirical results of the study. It also includes discussion part on the theoretical implications of the findings.

Finally, the study is evaluated with critically thinking and few suggestions for future research are introduced.

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15 2 THEORETICAL BACKGROUND

In this section of the research, I provide a synthesis of previous literature on this phenomenon and define also the key concepts of the study. This section focuses on introducing the concepts of commitment and sensemaking and how these concepts are related to the context of change and committing in it. Focus of the study shows, what digitalization at itself is and how case company Nooa Savings Bank is seeing it. The advantages and disadvantages are described, and how case company see themselves in the digital age. Furthermore, this part also introduces a theoretical framework, which is used in conducting the research. Since the literature is limited about digitalization, the surveys, reports, publications and other use- ful material are used.

2.1 Digitalization in the financial sector

Digitalization is in financial sector is rather new concept since the field is continuously changing but still the path includes old and traditional habits. Pohjola (2015) argues that in future the most successful companies are those who can combine people, digital platforms, efficient practices and global business in response to customer needs. very company that is seeking growth needs a digital strategy. (Pohjola, 2015.) According to that organizations change has become more and more important issue for managers and top management (Beer and Walton, 1987.) More and more the support of management has been raised as a current topic as well employees’ wellbeing. Some issues that have been raised out related to managing change, because of the analysis of the change management on towards employee’s behaviour in the company (Neves, 2011.)

More particularly related to this topic itself digitalization, as a driver, the company should increase the productivity of digital technologies to succeed. To ensure success of company it must maintain profitability, preserve jobs and promote employee wellbeing. Productivity in the financial sector is much higher than the national economy average. It can be developed by creating new products and develop new and better working methods. (Pohjola, 2015.)

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The previous literature shows that digitalization has been described to be greater step than Internet itself (EY, 2011). Even this statement shows that this area should be studied in all fields and especially in the field of financial. The employees are crucial factors when talking about the company operations. Without employee’s company cannot work and succeed.

Before the era of digitalization most powerful industries were technical and wood and paper industries. Nowadays world is different. Globalization and digitalization are the new forces of change. The main growth drivers are the knowledge-intensive service industries – those that use digital technology in the reform of its operations and products such as trade, information and communication, financial and insurance as well as other business services. In- formation technology is our economy’s fastest growing sector and the new strength. Behind these growths is ICT technology’s fast development. (Pohjola, 2015.)

Digitalization at itself means transferring data into electronic form. In past 15 years, this renewal has changed people lives notably. Digitalization but as well social media has enabled that people are facing more and more information all the time and everywhere. This has increased competition between companies. Thus, digitalization plays a bigger role to separate from competitors, but this is more and more important for the business. (Filenius, 2015, 41.) The decade 2010 was the era of the customers. This means 2010’s was from the business point of view, challenging year, since many sectors are living during upheaval, when business management and development plays a key role. (Filenius, 2015, 15.)

It is important that companies consider surroundings around them to understand them when talking about developing services and management. You cannot ignore digitalization; it is not an option to choose because it is here to stay. Digitalization will lead to the facts that the company’s strategy and operating model will build customer’s point of view. (Filenius, 2015, 37.)

Customer satisfaction has become a ground-breaking factor which reflects directly to business success. Digitalization, social media and globalization have led to the fact that the information is passing between humans is even faster. When avoiding the negative effects

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of the company, they must ensure that the customer experience towards company is positive. Even the small, local and specialized companies should aim to this, not only the large enterprises. (Filenius, 2015, 31.)

The reason why daily banking sector is changing is mostly because of digitalization. The current used methods of reaching customer are becoming more and cheaper than before, also the convenience is important. The bank branches are declining nowadays but at the same time new service opportunities are available and banks are concentrating to an online format, for example the in the daily banking sector, but also such as mortgage, loan and investment services are available online. Issue among older people or among people who are not familiar with digitalization process, could be involved to this new era as well. There- fore, digitalization has been found to be suitable in all ages and targets, and these old-fashioned services are costlier to companies (Koiranen et al. 2010, 24-29). New operators can now join the field, because digitalization has created its availability to everyone, for example it allows them to use new business models, to transform as a bank which do not have a physical branch but use only online platform to operate. One innovative example of this kind of operator is United Kingdom based Atom Bank, and it is working solely only on a digital platform. This Atom Bank is unique with its services, which are available only online, and it does not have any physical branches and opening a bank account is totally behind of only using mobile application and takes few minutes. (Atom Bank 2016).

The major impacts of digitalization can be seen easily correlated to people who have already moved to the digital way of paying, for example how they use their internet bank to pay bills which is considered as an average usage of online banking. According to Pohjola (2015) majority of Finnish consumers have transferred themselves to digital payment services and the change is significantly faster than in other countries generally, this change is happened between years 2008 to 2012.

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18 2.2 Sensemaking

Sensemaking as a term is referred shortly “site where meanings materialize that inform and constrain identity and action” (Weick et al. 2005). Sensemaking is self-explanatory as it simply means considering sense of events. In this context materializing in the view of sensemaking can be an issue of used language for example talk and communication in situations through talk brought into existence. (Weick et al. 2005.)

Sensemaking is usually approach by using two different perspectives: individual and social construct. First approach have been used as an example by Bingham and Kahl (2013) and Dervin (1998) is individual approach is based on habits of individual, and how it is used by learned models to make sense of new situations. Other perspective is social, whereas it emphasizes how to interact in the middle of change with the joint process (Maitlis and Lawrence 2007; Balogun and Johnson)

Weick (1995) states that as a simple way sensemaking means making sense of events.

Sensemaking from perspective of process can be seen individual and how you build your personality (Pekkarinen, 2015; Weick, 1995). The affection of people’s own experience is seeing by upbringing their personal experiences and social affects to the process. People in their own environment that they are not used to operate will provide a perfect platform for a sensemaking process when people are facing the events and new clues (Weick, 1995).

Sensemaking can be explained with the help of some critical questions of everyday life, within question is will give clear explanation of the context. With help of the questions it is clearer to face something incomprehensible, basically bring an event into existence in the real-life context. “How does something come to be an event for organizational members?

What does an event mean? Now what should I do?” (Weick, 1995) Here this second ques- tions explain about connections with the previous experiences and importance of other people around. Here the last question arises from assumptions how they see their future but also feelings towards upcoming projects, which are still unclear until guidelines are given, however the presumptions will become clearer when they progress with the projects eventually. (Weick, 1995)

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Sensemaking is also about being involved to cooperation of actions and interpretation rather than being directly influenced by the evaluation of life choices. Therefore, it is suggested that if action is the central focus of change, the choice of phenomenon is interpretation.

Weick (1995) stated in his book that in sensemaking theory, smallness does not mean in- significance of meanings always. Although, that can be even with the small structures and short moments the change process can end up being large and significance outcome.

(Weick, 1995)

2.3 Sensemaking and change

Origins of the sensemaking can found from organizational theory and therefore the context is frequently related to studies about organizational change but also change in general aspects (Kezar, 2013; Weick et al., 2005). One of the central elements involved organizational theory is it has a key role in explaining of human behaviour (Weick et al., 2005). According to Weick (1995), individuals who have make meaning of their work life are usually considered inside the organizations build by social constructions.

Sensemaking is usually seen referring in the change context to understand the change and especially for stakeholders of the change it aims to make the change meaningful (Kezar, 2013). Weick et al. (2005) states, that during the change process, the most difficult part is to engage people in it, since if they cannot see direct connection of process and change immediately. This can cause to situation where they do not find the process meaningful.

Also, the outcome is difficult to predict in advance. Thereby, this gives opportunity to leaders to operate as a key role to help establish connections between employees, place structures and processes in place. Leaders can assist employees to create commonly shared senses of organization such as work groups.

Sensemaking as a process can start with some of five different kinds of events categorized as 1) important planned, 2) important unplanned, 3) small planned, 4) small unplanned and 5) hybrid events. According to this digitalization is considered as a hybrid event. These digital changes inside organisation may affect both individuals but also larger groups and

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this way they interpret in the daily work. Thus, they occur for organization although employees do not want, even it is in individual level. (Sandberg and Tsoukas, 2014) According to Weick (1995) it may suggest building up relationship between sensemaking and commitment. When people find the change meaningful they commit it more easily.

Sensemaking studies have usually top-down approach and they are made by studying perspective of manager’s, as good examples have made by Pekkarinen, (2015) and Lammas- saari and Hiltunen (2015). However, after time these kinds of studies also have included middle managers views. Though, these studies concentrate only for the first stages of the change process which leads to that study provide whole picture about the process therefore usual assumption might be that sensemaking would have less important role at later stages, after it is achieved. (Kezar, 2013)

As a theory, sensemaking has found to be used as a theoretical framework for data analysis (e.g. Pekkarinen, 2015). In her study Pekkarinen (2015) she used Weick’s sensemaking framework when analysing collected data in the context of change. But not often the theory is used as a analysing method according to Lammassaari and Hiltunen (2015). Therefore, Lammassaari and Hiltunen (2015) used all seven sensemaking dimensions to analyse interviewed data to make sense of change. The paper was done by interviewing one manager in the Finland healthcare sector. This study offered interesting insight in healthcare context and how manager build up own identity construction through usage of sensemaking dimensions.

2.4 Commitment to change

The main focus in the research of change management is mainly to identify crucial factors which are affected in order to success or failure in the change process. However, there is major lack of research which is focused on to explain the importance of various factors to achieve successful implemented change (Luoma, 2015). This gives a hint that commitment has been found to be one of the essential elements when implementing successful change within organization (Meyers et al., 2007; Brown et al., 2007; Iverson 1996). Definitions of

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commitment are available multiple. The definition by Meyer and Herchovitch (2001) is implemented in this study to refer commitment level of the employees. Meyer and Her- chovitch (2001, 299) defines commitment as “a force that binds individual to a course of action of relevance to a target” and that it “can be accompanied by different mind-sets that play a role in shaping behaviour”. This definition was found to be suitable for this kind of study.

The study of Mayer and Herchovitch (2001) has been cited multiple times by many scholars. Among the first scholars they have developed a model for workplace commitment in general way, and with this invention they have been leaders of this topic. Many researchers have widely used the three characterizations of three types of commitment which they developed. The categorizing was made based on different mind-sets of employees. The categorizing was following; included affective attachment to the organization, perceived cost of leaving and obligation to remain. Mayer and Herchovitch (2001) states that sometimes commitment may be accompanied by any of these three mind-sets, which were named following as affective commitment, continuance commitment and normative commitment.

Iverson (1996) states that some disagreement has occurred among scholars of the definition of organizational commitment over some time. Thereby, these scholars have agreed to use a term “commitment” to describe both attitudinal and behavioural commitment. Both terms are distinct each other but related to the same topic. Attitudinal commitment described as

“the degree of loyalty an individual has for an organization”, and behavioural commitment described as “the process by which individuals link themselves to an organization and fo- cuses on the actions of the individuals” (Iverson, 1996, 128-129). The reflected linkage between the individuals and the organizations seems to be the common factor in both theories.

Changing financial sector has been widely studied and discussed in media and within organizations. The process is described as stages from initiation to the end (Brown, 2007). As a factor in the stage of acceptance was found as the most important to be commitment and therefore immediately gained importance steadily throughout the process.

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Many studies have been made about the factors which affect employees’ commitment to change. Some of these factors are found as communications, sense of equal agreement (Si- dle, 2003) and leadership (Hill et al., 2012; Neves, 2011). For example, Sidle (2003) examined the importance of employees' commitment in the change processes. Increasing need of commitment was in requiring of communications, for example the purpose of the change was needed only in the early stages of the change. The feeling of equity on the work place was found to be very positive thing to recognize the attitudes and behaviours of employees.

In the planning stage the employees’ findings over equal agreement may be affect to the employees’ trust negatively. These negative findings can also decrease their willingness to stay in the company.

Hill et al. (2012) studied about change context the factors which affects as the most in to direct leaders. This will also tell that most of the researches has mainly focused only on top or middle level managers. It was found that direct leaders who possessed a more transformational leadership style, that employees have reported into higher levels about affective and normative commitment. They also suggested that transformational leadership is needed at early stages to raise employee’s commitment towards work community.

Neves (2011) have studied the relationship between competence and support of supervisor and these competences direct relationship to commitment to change. It was found that when implementing the change successfully in the organizations supervisors could be the change agents in the change where they are having a key role. It was found that observed supervisor support was seeing as a reliable and positively relationship between competence and affective in the change process. However, even the supervisors are having a key role, hence their involvement was also found to be negatively affected to continuance of change.

Although, the commitment in the change process has been studied quite extensively in past years (Allen and Meyer, 1990; Meyer and Allen, 1991, 1997), whilst the commitment to change has been studied only recent years (Herscovitch and Meyer, 2002). Moreover, the description of commitment to change is introduced to construct a linkage that connects

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people and changes scores together (Conner, 1992). Other definition of the commitment to change is made by Herscovith and Meyer (2002, 475) who described it as “the forced mind- set”, which connect an individual together with the primitive idea about the change initia- tive to conduct a successful implementation. A lot of attention has been giving to supervisors, which directly possess that they play key role when managing their teams and employees in to success but Neves (2011) argues that the topic is still undiscovered overall and according to Neves (2011) only one single study has been made of topic such a development of commitment to change (Neves, 2011, 438-439.) But the real problem is in the area where the supervisors plays roles as agents of the change within companies. Supervi- sors are not only leading their teams but at the same time their job is to motivate others to commit to change more intensively and teach how to overcome upcoming obstacles (Paglis and Green, 2002, Neves, 2011, 439.)

The leadership of every organization is not on the same expected level; we do question if the airline company fails with delayed flights or the hospital does mistakes. But what comes to organizational change we allow more failures than normally. The outcome could be very poor but still acceptable. These wasted hours of working cost a lot to the company and its employees but it is still welcomed outcome. According to this description it is obvious that management is doing something wrong and it requires some corrections to process.

(Iveroth, 2016.)

According previous literature of digitalization, there is not yet studies of between digitalization and commitment and especially from perspective of employees. Thus Neves (2011) stated that he wanted to fill the gap between supervisors’ support and employees commit to change. Therefore, the gap must be fulfilled by using literature and hearing employees voice. This study based on literature of sensemaking and with the literature study examines the way to commit to change and the study implications are from perspective of employees.

With interviews the comparison of company’s current state to the existing literature has been made. The previous literature shows that much more can be studied in this area and the benefit to the field and my case company could be massive.

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All in all, the interest towards financial sector and commitment to change literature increased the interest to this topic. There are available multiple studies from the managerial and change management point of view but not in this specific context since the digitalization change is quite new concept and therefore gap needs to be filled. Furthermore, the existing literature has left a gap which includes the factors, for example commitment, affecting to a successful change. Hence describing how employees make sense of commitment process, also its importance may be explained.

2.5 Theoretical framework in this study

Theoretical framework of this study based on digitalization in financial sector, sensemaking and commitment to change.

Digitalization

Sensemaking

Commitment to change

Employees´

sensemaking about digitaliza-

tion in financial sector

Figure 1. Theoretical framework of the study

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Weick (1995) introduces seven prosperities of sensemaking, which includes characteristics to define studied phenomenon more deeply. With the help of these seven prosperities the aim in the new, unclear situation is to assist organize issues together (Lammassaari and Hiltunen, 2015; Weick, 1995). The process of sensemaking is seen rather as interpretation than comparison of events (Weick, 1995). These entire seven characteristics were included by Weick (1995) which gives an interesting scheme to take a look change process. Also, as they are divided into seven different characteristic gives opportunity to implicate all questions separately. Thought Weick (1995) suggests that the characteristics to be presented as an order. However, over some time some steps may drop out during the journey due to simultaneous handling.

According to Weick (1995) sensemaking has divided under seven different prosperities as following;

1. Grounded in identity construction 2. Retrospective

3. Enactive of sensible environments 4. Social

5. Ongoing

6. Focused on and by extracted cues and 7. Driven by plausibility rather than accuracy.

Weick (1995) defines that sensemaking process always begins with help of a sense maker, because identity is built upon past happenings and experience. These previous actions define how the past meanings are understood. Aim of individuals is to achieve inner balance and thus aim at interpreting in new, unclear situations this context supports existing knowledge and identity. In other words, own identity of individual is all the time redefined

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by the surroundings in the lived environment. When the identify is built though evaluating own actions towards the surroundings in the environment person is pleased to outcome and can transform and adapt new situations.

Overall, the deep meaning behind sensemaking is that its objective is to fill the gaps of past episodes; this way it will give the retrospective insight in it. Sensemaking is applicable in past event only when the past event has happened. When event is equal to be affected and assessed by many factors for example as existing events and the context of the situation.

Furthermore, which can also affect to assessment process are the values, prioritization and the clearness of choices of the individuals. It is stated when people make sense about the order of events and see things rationality, they can progress forward in a changed situation.

(Weick, 1995)

People usually have more than one project at work or personal life going on simultaneously.

In the beginning, people have different visions of these projects and this may cause confu- sion during the journey. People easily rely to past events. Common conjecture here is that people need more knowledge about situation to avoid confusions, though it is not always like this. In situation where all are overwhelmed equivocate, people do not usually need more information. Instead to gain more information, the need is in the values, priorities and clarity about meanings. These mentioned factors can help people to succeed with projects and see the sense of projects more clearly. (Weick, 1995)

Operating in sensible environments and being enactive in area is related to evaluating the causation, responsiveness to stimulation and relationships of the events. What is based on the experiences of the individuals the evaluation is made as subjective way. Therefore, individuals have pursuit to avoid experiences which they do not find understandable instead to be aware of the routines which can lead to situation which makes sense of the current time. (Weick, 1995)

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Weick (1995) notes that in the sensemaking process, the social aspect is always present.

Sensemaking is more like a social phenomenon which includes spoken language, joint actions, symbols, agreements, culture, commitments and expectations. Listener has an also vital part in the sensemaking process; the role is either a dialogue with individuals themselves or one-way communication with another party. Hence, the listener can affect the communication with its own reactions, which can affect directly to the process of sensemaking.

It can be difficult to define any clear starting or ending point for sensemaking process, thus these characteristics makes it continuous process. Therefore, it leads situation where the individuals are continuously in the middle of contradictory events even they do not realize it. Even the individual may recognize the change event less meaningful for them, it still may have direct actions towards change process and leads to situation where organization is still going forward. (Weick, 1995)

One of the dimensions is described that sensemaking is focused on and by extracted cues.

This can be referred as a interpretation and determining of what the noticed cues means.

Weick (1995) refers simply these extracted cues as “simple, familiar structures that are seeds from which people develop a larger sense of what may be occurring”. Therefore, these cues are seen as factors which indicated how individuals compare their feelings about organization’s direction where it is going. The leaders of the organization are usually the ones who acts as forerunners, therefore ability to implement things can be seen as an important source of power of leader. Sensemaking need the specific context to operate, which makes it highly important and the role is significant in the light of defining what the extracted cue will be. Moreover, the change context defines how to define extracted cue and how this cue is seeing in the light of context.

Weick (1995) states that in the last characteristic in order, being driven by plausibility rather than accuracy, individuals read the events of the surrounding environment based on their past life and with the help of past events they try to fill and create new sequence of their upcoming events. Case, where interpretation supports their previous experiences is highly

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important factor. The balance between past and current situation is important which can be described as a sensemaking process. Weick (1995) suggest that preciseness is not as important, since first individuals need to realize and filter the meanings to achieve clearance in situation which is unclear for them. They must explain first themselves how they see situation before explaining it to others. Furthermore, usually people try to simplify events themselves first in order to enable the selection of choices and rejections, how to make sense of events.

Weick (1995) says that different attempts in the process of sensemaking can lead to fail, still it will help to organize and simplify the clues in the environment and with the help of these to mirror new experiences to the past situations. First created meanings, gives background to individuals make new interpretations to define and make clear of the meanings.

The process continues until the common understanding is formed and balance reached in the situation. Before the end, the process is continuously repeated until the satisfied result is achieved.

3 METHODOLOGY

This part of thesis introduces the methodological approach of study chosen and the plan of it. It examines the methodology used, data collection and analysis methods; also, it will discuss of ethical issues which every study could have. In the end study will introduce the results and findings of the study what was found from the collected data.

3.1 Methodological approach

The used research method is qualitative approach and the chosen research strategy is explanatory case study. Yin (1997) says when studying real-life occasions, case study method provides comprehensive and meaningful information in this phenomenon. These real-life occasions could relate to a personal life also, but same time comes from organizational process in a company. According to Yin (1997, 3.) there is available three different ways to use case study approach: exploratory, descriptive or explanatory. Chosen between these

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could be based on the research question, which defines the strategy used. Basic questions are who, where, how and why type questions. In this study, the main research question aims to answer “how” type of question, and Yin (1997, 6) defines question “how” as an explanatory question This type of question helps to understand more deeply the studied phenomenon and, in this case, how the employees make sense to change. As a type of questions

“how” gives in-depth understanding of investigated subject, therefore case study is excel- lent method to study something problematic and difficult and explain how something was done step by step. (Yin, 1997.)

The aim of the research was to examine employee’s commitment to change in the financial sector. With correct methods used the deeper and comprehensive understanding of this phenomenon is possible to achieve. The knowledge of commitment of the change can be reached by studying how employees experience in the change process can be seeing. There- fore, the aim of the study is to gather deeper understanding of employee’s commitment to change in the financial and how it is described by the employees.

Carefully chosen research method can lead research towards wanted result though poorly chosen method can possible slow down whole process and could be harmful to the research.

Therefore, general features should consider, when choosing the suitable method: What would have been the most rational choice for this research, what kind of method should be used in the data gathering and what should be considered as a practical matter (Hirsjärvi, Remes and Sajavaara 2013, 185.) In this thesis, case study should be considered as an approach rather than a method only, as the data collection and analysis can support qualitative research, depending on aims and the question (Kovalainen et al. 2008, 116).

According to Kovalainen et al. (2008, 117) companies sometimes uses their histories to look at their business problems but at the same time histories can use to look of success and failures. Case study has many popular reasons to be chosen as one of its advantages is with it even a difficult and complicated business issues can be introduced in a clear and understandable format for audience (Kovalainen et al. 2008, 117.) The most common definition of case study research according to Kovalainen et al. (2008, 118) is the that method is ideal

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when wanting to create with multi-dimensional and comprehensive knowledge which can based on many different sources the analysis of the phenomenon in the rich context (Tellis, 1997.) Moreover, case study as a method avoids simplistic designs, therefore its target could be it will give a place to diversity and complexity of studied case. (Kovalainen et al. 2008, 118.)

In various researches, one can find a definition for a case study’s “case” which usually is an individual person, such as employee, manager, organization or even customer. There- fore, one of the advantages to use case study is to get complete overview of economic branch life from the perspective of individual person. Therefore, interview method has chosen to find out real-life occasion in a case company, described by its employees. Through individual told narratives it is good way to study a specific context and to get deep insight of the case from the perspective of all related actors with the analysis (Kovalainen et al.

2008, 116.)

Among the most of situations, case study method is usually made to help managers when they make decisions in processes in aiming to get better vision of their ingoing business’s operations. (Kovalanen et al. 2008, 117.) Even, this study will give a practical overview in business-related context; however, its efforts are mainly focused on the employee’s site.

The target of the study is to collect information through employees. In general, the case itself cannot be always easily explained, it has been described to be an object, thing, hap- pening or even target. Usually case has been chosen from the past or what you prefer in your life, or even how interested you are in something. All in all, case study is not only a method, it is more an approach, like a point of view, or way to interpret real life events, describes Saarela-Kinnunen et al. (2001, 161, 168). This research is conducted by using one case company as a case.

Using as a method single case study, it allows concentrating only one case by time. In this case, the intent is to look at specific period of the financial sector change and this study is planned to help to investigate employee’s feelings in the financial sector inside the case

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company. The case itself is a phenomenon called sensemaking and it is being utilized to figure our current state of change process.

3.2 Data collection

The main goal of this study was to examine sensemaking process with commitment to change from the perspective of employee’s in the financial sector. The primary data was collected by holding in-depth semi structured interviews. This means that the research was done by collecting primary data only. The data collection part was done in five face-to-face in-depth interviews. All the data was collected during the summer 2017. All the interviewees worked in the chosen case company. Every employee is facing the same change process and the answers are connected on an individual level of perception to the process. The change has been taking place within the case company and in the whole field for some time, which brought a retrospective approach to this study.

Kovalainen et al. (2008, 128) states the way to collect empirical data, and how it could be done by using either one or multiple sources. In this case, the chosen way was to use in- depth interviews as a primary data sources. However, including also other kind of sources it could increase the reality of study. Therefore, interviews have increased its reputation as collection method since 1980’s. The importance of interviews has been describing so with this method the data is collected carefully and well conducted interview is also motivating experience for the people involved (Koskinen et al. 2005, 105.)

Primary data for further thesis has collected by conducting in-depth interview in the company. Altogether, the author has conducted five interviews. All the interviews were done by face to face, which was more effective and reliable way to collect information, therefore the further data was analysed efficiently. All the questions were open ended in the interview and the interview was separated to five different themes to discuss. Sensemaking theory

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gave a background to rise up all the interview questions from the theory but also the questions were related to case company’s context. The five themes were analysis of current situation, own description of the situation, intention, future analysis and whether is it possible to achieve with actions chosen.

Since only all the themes were drawn up in advance, but also had set preliminary questions, it helped to conduct the actual interview. Interviewees had seen the themes beforehand in the email, and that gave time them to think what they want to say in the interview. The biggest advantage of open ended questions in the interview was that the interviewer has ability change the order of questions to make the situation as comfortable as it is possible for the interviewee. (Koskinen et al. 2005, 104.) The interviewer has a huge role in the interview, it is not only observing how it goes, though being as a key player and leader of it. Even the questions were drawn in advance but following the narrative what the interviewee was presenting the continuance of discussion was ensured with this method and always it was followed by interviewee. These suggested themes for the interviews can be found in Appendix 1 and Appendix 2 in both Finnish and English. All the interviews were held in Finnish language. Sample quotations provided in the section four in English language.

The interviewees were chosen through the network of the author and their own advantages and interest towards field, therefore interviewer used own knowledge to pick up best ones.

The interviewees were contacted by email and in the email was included a brief description of the context and the main aims of the interview. It was told that it is based on free will and there was also possibility that interviewee would have been unable to participate and that would have caused delay and choosing another person in place of original. At the beginning of each interview the topic was introduced again. The interviewees were told about their anonymity and consents for recording the interviews were confirmed. The anonymity was ensured to encourage free insights from the participants.

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The most important criteria to choose right participants to the interview was that they all had several years’ experience in the field though they all were rather young in the field.

This gave interesting opportunity to hear young people voice rather than persons who have been working in the field 40 years. The participants included both man and woman since both point of views wanted to be heard. The participants were not all from the same profession which was also one criterion to interview people from different areas such as working with customer and back office.

All the interviews were hold and recorded in Finnish, since all the participants were native Finnish speakers. The chosen language was done to avoid errors in the interpretation. The same reason was also when data was transcribed and analyzed in Finnish. Sample quotations provided in section 4 were translated into English only. The interviews were ranged from 35 minutes to 50 minutes. 233 minutes’ total of data was collected. The following table shows the details of the gathered data more specific.

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There were both man and woman involved to interviews. They all had worked several years in the field and had experienced the change in the field. All the interviewees had their own personal duties in the company therefore their experience and approach vary a little bit from others. But all of them were faced same change inside the company. However, all the participants were aware of the change and what has been happened and what will be coming.

Four of the interviewees were directly in employee level but also ne middle manager was interviewed even though she does not have direct employees. One of the interviewees has been previously working as a manager but wanted to change her profession back to customer work though she has had many different professions in the one company. However, all the participants were aware of the change and what has been happened and what will be coming, which gives meaning that they are all in the same line and their starting points are same.

Interview held Employee profession Years in the field

(approximately) Interview time Employee 1

29.6.2017 Service Advisor 6 35 min

Employee 2 4.7.2017

Assistant Portfolio Manager 4 48 min

Employee 3

18.7.2017 Service Advisor 6 50 min

Employee 4

20.7.2017 Investment Manager 6 40 min

Employee 5

27.7.2017 Customer Retention Manager 10 45 min

Table 1. Data collection

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The main theme in the interviews was level of knowledge towards commitment to change.

A large amount of questions and sub questions were asked to find out how they see themselves in the change process. These were asked to find out common factors amongst the employees. Also, factors affecting their commitment towards usage of new systems were asked.

3.3 Data analysis

After the data was gathered, the next part was to analyse it by conducting theory-based analysis with deductive approach. This deductive approach means that when data is analysed it is compared to existing theories. (Saunders et al. 2009.) The acquired results are compared with sensemaking framework. Moreover, Saunders et al. (2009, 450) talks if the chosen approach does not fit to the existing framework perfectly, it is possible to use both approaches, deductive and inductive. According to Eriksson and Kovalainen (2008) theoretical aspects of this specific subject act as a basis on the researcher can put a hypothesis or multiple them. This kind of approach can be seen linear, since it proceeds from theory based to empirical research.

Categorizing the common meaning means when researcher has settled the categories and dividing the data according to the categories. All the categories are settled by researcher and formed from the collected data. The theory behind analysis is sensemaking theory. The integrity of the collected data was main idea to keep during the study. (Saunders et al. 2009, 491-498.) According to Kovalainen et al. (2008), content analysis is one of the most suitable ways to analyze this kind of data. Content analysis is more concerned with the contents and frequencies of the text, rather than form, structure and meanings. The meaning is to find themes and patterns from the text. The analysis usually is done by coding and it helps to combine text into fewer categories, which allow that text is more readable. The usage of coding can help researcher to find out the common meanings of same categories and find out the similar meanings they share. Conducting the content analysis can be done by following the process introduced by Weber (1990), first define the recording units, second

Towards branch-free financial sector? : Employees' sensemaking of commitment to change