Executive Summary

In this report, the vulnerability of a business while undergoing changes is listed. A need may arise to change business objectives or strategies in order to shift to the desired channel or expand a business. A background of Direct Line Group is given, along with the importance of a strong governance framework. Certain interpersonal skills to inspire and motivate the employees are discussed in this report along with their benefits in promoting business growth. Effective identification of risks and opportunities throughout the life-cycle of projects are promoted. Processes to capture and assess potential changes are talked about along with the recommendations to Direct Line Group in order to promote business growth and improvement.

The scopes of the project such as main objectives and key decisions are listed in this report to give a better understanding. The key decisions that are needed to improve the products and services are stated.


Decision references Key decisions and options Pre-consultation Post-consultation
D1 Implementation plan period 8 months 8 months
D2 Percentage of managers laid off 15% 10%
D3 Percentage of employees laid off 15% 5%
D4 Human resource practices Rationalize Retain
D5 Branch networks Rationalize Rationalize
D6 Portfolios of products Replace Retain
D7 Process of loan approval Replace Rationalize
D8 IT systems Rationalize Replace

1. Introduction

A company while undergoing changes is vulnerable to significant risks. A need may arise to change business objectives or strategies in order to shift to the desired channel or expand a business. There may also be a need to change due to certain financial problems or significant losses previously faced by an organization. Risk is usually related to uncertainty regarding unfavorable events, whereas opportunity is referred to as a probability of favorable outcomes. It can be said that opportunities are directly related to risks. Higher opportunity, greater is risk associated with it. Proper management of operations and processes is necessary to minimize and eliminate threats during the transition period of a business. An effective management team comes handy here to promote and manage the necessary alterations required.

Direct Line Group is a renowned company specializing in providing various products and services that includes selling products to its customers through telephone and online. The company also provides various insurance and loans for business start-ups and growth along with roadside rescue and recovery services. It had a gross retain premium of £1,671.2 million, £606.9 million, and £422.8 million in motor, home, and rescue segments respectively in 2018. It also had a gross retail premium of £511 million in the commercial segment in the same year. Direct Line Group after facing a financial crisis in 2008 came across some threats regarding the insurance business that was ordered by European Union regulators. It separated its insurance branch from the main one due to this. The decision bore fruit, as in 2012 the independent unit came across a significant profit margin which gave the company a noticeable market share.

Merger and acquisitions play an important part in the growth and maintenance of a competitive market share.

2. Project Scope

Paul Robert, who is Direct Line’s CEO, initially defined the project scope and evaluated the business plan to prepare the consultation period. The project was carried out to manage and take decisions on the governance framework of the company. This would manage the company rules and regulations and also improve the conditions and management system. The project scope was to intialise and plan a proper governance framework for the company.

Main Objectives Link to key decision Initial decision Final Decision
Association of operations D2 Percentage of managers laid off 15% 10%
D3 Percentage of employees laid off 15% 5%
D4 Practices in Human Resource Rationalize Retain
D8 IT systems Rationalize Replace
Leverage alliance scopes from the new branch network D5 Network of Branch Rationalize Rationalize
D8 IT systems Rationalize Replace
Leverage alliance scopes from the customer base D6 Portfolios of product Replace Retain
D7 Process of Loan approval Replace Rationalize
Defense against the threat D1 Implementation plan period 8 months 8 months
D6 Portfolios of product Replace Retain
D7 Process of loan approval Replace Rationalize


3. Key Decisions

The key decision focuses on combined banking operations by considering the available resources, and existing products and services. A modified branch network and new customer bases is the key to increase and develop the market growth strategy.

The company should give focus on improving and modifying the relations with the stakeholders. Direct Line is facing the threats of major changes, which is arising due to their late implication on the projects. Understanding and evaluating the stakeholder’s needs will help to implement these changes early in the project and avoid major changes later on.


The implementation time of 8 months was a good plan to come to a common ground with the stakeholders. IT director of Direct Line proposed to replace the company’s IT systems, as it will allow sufficient testing before enabling the new changes in systems. The new systems were also welcomed by the stakeholders. They are used to train and educate the combined workforce regarding the new products and services.


Direct Line agreed to lay off a certain percentage of managers in its branches. Transparency and clarity was maintained in the processes to promote fair involvement of new merged culture. The initial plan of Direct Lines was to lay off with 15 % managers, which was later reduced to 10% due to certain concerns.

Current number of managers 1120
Number of managers after 15% layoffs 800
Number of managers after 10% layoffs 920


Similar to the managers laid off, the same percentage was agreed regarding employees laid off. The initial percentage was 15%, which was later changed to 5% due to certain considerations of early retirements and resignations.

Current number of employees 10,000
Number of employees after 15% layoffs 7300
Number of employees after 5% layoffs 9456


Modifications on the HR practices were optimized in order to make processes related with human resource smooth and effective. It can be said that Direct Line selects and keeps the effective practices and applies them to all the workers and staffs. After coming out from its parent company, Direct Line needed to implement certain changes in the human resource management process. The company made HR policies from scratch and developed them into effective Human Resource strategies to propel the company’s growth. Implementing complex structures may give rise to difficulties in the HR processes. Simplifying them will help to avoid further confusions and complicacy.

4. Financial Impact

Direct Line faced a boost in its revenue during the initial stages by focusing on cost savings and increasing net earnings. After the changes in systems and processes were made, its financial position in the market changed. As there is a presence of negative revenue growth, the company needs to optimize and modify its processes to promote higher efficiency and productivity.

5. Stakeholder Engagement

Direct Line Group lacked in proper management of its stakeholders and their satisfaction. Some stakeholders were given more attention than the others. A negative satisfaction score was seen for certain stakeholders, due to which the net satisfaction gets affected.

Stakeholder mapping reflects the contribution of various stakeholders of the company and the key players in the organization.

Direct Line Role Stakeholder Satisfaction (-3 to +3)
Paul Robert Chief Executive Officer -2
Tim Harris Chief Financial Officer 3
Simon Linares HR Director 2

2. Governance frameworks

Governance frameworks refer to government structure within an organization. It reflects upon relationships, factors, and various influences that are related to each other in an organization. Stakeholder’s behaviors and expectations depend substantially upon the governance framework. Interactions and meetings on a regular basis will ensure a good mutual relationship. Effective communications and fair trade between the two parties will help to establish a healthy relationship among both parties. A company should understand the views and interests of the shareholder and vice versa. Maintaining and developing a healthy relationship is the key to growth for both shareholders and the company. Direct Line Group should put effort into developing and modifying governance structure strategically and effective in a way such that the interest of both parties is maintained (Binder, 2016, p.23). Organizations may initially provide certain benefits and plan to attract new stakeholders willing to invest in the company. It should also focus on developing and maintaining relationships with existing investors. Major stakeholders and their actions are determined by the corporate governance committee of an organization. The board should understand the positions of these stakeholders and predict conflicts that might arise between the two parties. Major mediators are senior members of the management team who play an important role regarding the engagement of stakeholders. Main aspects of contracts for stakeholder issues are included in this role of management. These are effective in fields where management is considered as a preferable option in order to converse with shareholders. Importance should be given on annual meetings to maintain diplomacy and promote an effective mutual understanding. Direct Line Group should put effort to broaden the shareholder access to these annual meetings in order to ensure maximizing the scopes and opportunities for both parties (Heldman, 2018, p.69). This can include problem discussions, solving issues, and promoting the development of organizational operations and processes.


Figure 1: Governance elements

(Source: Kerzner, 2017, p.104)

Engaging the shareholders on a long-term basis in a consistent manner will help to sort out the future risks and opportunities associated with the business processes. Maintaining effective interaction protocol and responding timely to the concerns of the stakeholders will help to promote and maintain a long-term relationship. The interests of the shareholders may vary which can often lead to complex situations. Direct Line Group should evaluate and measure the long-term interests and objectives of the organization and proceed accordingly in that direction. Considerations should also be made for the shareholders such that they can benefit from the pact as well on a long-term basis (Kerzner, 2017, p.104). This will help to prevent various complicacy and threats including the financial crisis that was faced by the company back in 2008. In addition to consulting the shareholders regarding various matters, the organization should also be capable of making and executing independent decisions. This can be done by careful consideration of the possibilities in the market and strategizing the course of actions ahead accordingly.

A few shareholders might use analysis and pieces of information provided by a third party in order to make voting decisions. These methods may not be suitable for certain organizations as a consideration of individual facts and circumstances might make them unsuitable for this way of approach. Attempts should be made by Direct Line Group in these situations to help shareholders make appropriate voting decisions (Verzuh, 2015, p.71).


3. Interpersonal skills required

A constant attempt to motivate and inspire the employees is required in order to attain good results and propel the growth of a business. There are certain ways in which the leaders in an organization can guide the employees in the right direction. Sharing the vision with the workers and setting goals will ensure good results. Direct Line Group should make sure that its employees are aware of the goals and objectives set by the company so that the maximum possible result can come out of it. This enables a working environment that promotes a collaborative approach. The goals should be set in a clear and realistic way such that progress can be tracked and updated. This gives rise to productivity among the employees and a feeling of value and motivation comes to them.

Promoting effective communication is another way to inspire workers (Stark, 2015, p.25). A both-way communication approach is necessary in order to establish a healthy and effective relationship between the employees and the leaders. Direct Line Group should focus on keeping its employees up to date and collect their ideas and feedback. These ideas and feedback can be used for further modification in the necessary fields of the organization. Giving them the opportunity to speak and express their ideas as well as possessing an approachable attitude will have a positive impact on organizational goals and objectives. A work environment that promotes teamwork will have a positive impact on the performance of the employees. There will be a significant change in output results due to this factor. It boosts productivity and gives them a sense of being a part of something greater. The company should recruit people who tend to work better in groups rather than alone (Cagliano et al. 2015, p.234). A person may be experienced in the work field but lack the ability to work in teams. This can give rise to communication complicacy and work delay.

A suitable and healthy work environment is necessary to promote quality work and boost the performance of the employees. It is recommended that Direct Line Group should invest in manpower and resources to improve its work environment. The employees can be happier and perform well in their tasks due to this. It can focus on controlling elements such as ambiance, noise, and privacy of the workers to improve the company’s work environment.


4. Benefits

The company should understand the benefits that come with a strong governance framework and effective interpersonal skills required to motivate and inspire the workers (Marchewka, 2016, p.128). It should work on improving and modifying them in order to increase profit margin. Good decision-making skills are required in an organization to conclude the major courses of action for the benefit of the company. A wrong decision can severely affect the business and its market hold. The leaders of Direct Line Group should be capable of carrying out major decisions in terms of crisis to steer the business in the right direction. In order to ensure an effective decision-making process, the leaders along with the stakeholders should contribute towards the decisions. The process may extend to the junior and senior employees as well. This diverse set of opinions will help critically analyze the faults in the process. This will in turn help to make a decision that will be favorable for both the stakeholders as well as the organization (Turner, 2016, p.36). Proper knowledge and experience will help in the decision-making processes. Lacking the necessary skills and implementing rash decisions may be fatal for the business in the long run.

The decisions may have different types such as alternatives, interpersonal, and complex. It also includes high-risk and uncertain decisions. A decision is needed to be identified from the list of decision types. Evaluation of this decision will then be needed in order to come to a justified and reliable conclusion. In some cases, the decision may come under more than one classification. Complex and lengthy procedures are required to come to conclusions in these cases. These might demand a lot more time, experience, and skill sets than normal cases (Meredith et al. 2017, p.151).                     


5. Risk and opportunities

The United Kingdom is a place where a new company is rising every day. The competitive market that creates conflict and conflict is the reason of risk for a company (Binder, 2016, p.36). Risk and opportunity are two sides of the same coin. One company takes various risks in terms of getting a better opportunity that can be profitable for the company.


5.1. Risks

A company takes various steps to grow up and hence risks come with such steps. Risk is an essential part that financial managers need to predict to overcome possible loses. The process of identification of risks, analysis and mitigating uncertainty is called Risks Management (Heldman, 2018, p.96). Risk management is a part of management as well as for investors. A company sometimes needs to change their ongoing project when the directors of the company found that is necessary for the future of the organization. Profit earning ability may increase dramatically by taking proper risk however vice versa is also possible (Kerzner, 2017, p.47). Therefore, risk management is crucial for the manager of a firm while seeking profit, a wrong turn can be the cause of dissolution for the company. Planning management can decrease the negative sides of the risks of the company (Verzuh, 2015, p.122). Hence, good planning should be the first step for a company to eliminate possible risks. However, a company may need to change the ongoing project if they found that is necessary for future organization. This is a crucial time as many vital decisions need to be taken by the board of management. Profitability in future and current economic scenario are those parts that need to be focused on by the financial manager of the company (Stark, 2015, p.27). In this report, the risk taken by an insurance company, The Direct Line which was a division of The Royal Bank of Scotland Group is discussed. The 2008 financial crisis is the time when several companies are dissolved or merged with other companies to survive. The process of selling insurance of the company was only telephonic in the United Kingdom (Cagliano, Grimaldi and Rafele, 2015, p.240). However, after the 2008 financial crisis, European Union regulators ordered the Direct Line group to sell its business. Therefore, the company took the risk of separation of its business into a standalone company.


5.2. Opportunities

Risk and opportunity are connected with each other, as a good plan to overcome possible risk creates a better opportunity for the organization. The main goal of a company is to maximize its profit at its lowest cost (Marchewka, 2016, p.69). In order to increase the performance of the company financial managers seeks opportunities that can increase the rate of profit at a lower risk. In this report opportunity after having a great risk of The Direct Line group is discussed (Turner, 2016, p.49). The Royal Bank of Scotland Group decided to separate its insurance business into a standalone business. The decision of taking the risk turned into a great opportunity in the year 2012 as the stock price of the Direct Line Group was skyrocketing.


6. Processes to capture and assess potential changes

Assessing potential is about probability or predicting future success in terms of achieving the goal of the company. A director or manager needs to be potential about the goal of the company and apply the plan according to it. Performance is a factor for a company that reflects the potentiality of the firm (Chang, 2016, p.540). Companies put track record from the starting point to judge their performance throughout the period. However, the old record sometimes misleads the company by providing wrong information and the causes of potential changes for the firm. A company may make a good performance in the beginning but that does not guarantee that the company will successfully achieve the goal (Zafar, Nazir, and Abbas, 2017, p.7). The learning agility is a great power in a market full of competition. The ability to learn from past experiences and extracting key learning indicates the potential of the company. Leaders of companies always need to learn from the results of their every step. The competencies of the company also take a huge roll in potential aspects (Heagney, 2016, p.7). A financial manager measures the potentiality of the firm by competencies of the company. However, this process often misleads a company as it is not a simple process and overly prescriptive. The company changes its potential often because of the measuring competencies of the company because it represents what has made in the organization instead of focusing on future aspects (Uhl and Gollenia, 2016, p.69). Multinational companies who have no mobility cannot stay for long in the competitive market. Efficient movement proves the potentiality of the organization. Readiness for expansion or promotion comes with the potential ability of the company. It may have a risk if the company is not totally prepared for expansion or promotion then the company can go bankrupt or dissolve in no time (Pollack, 2016, p.1046). Therefore, readiness can be the cause of change in potential. The values and cultural fit often not clear to a company because of having no element to measure it with. It is important for a firm to assess the organization’s true culture and climate. A wrong assessment of the culture and climate of the organization can mislead the company, hence the potential of the company changed. In this report, The Royal Bank of Scotland divided its insurance division into a standalone insurance company (da Cunha 2016, p.27). Initially, the potential of The Royal Bank of Scotland was to run the insurance division alongside the main division. However, a change in climate resulted in the company to split into a separate company. Although, the potential of the main division remains the same the Direct Line group makes its own potential for the company (Mdaka 2016, p.310). The change of potential of the company reflects a good result as in the year 2012 stock price of the company increased.


7. Recommendation

Sustainability needs to be maintained by a company to develop their company. Potentiality is necessary for a company to maintain its sustainability. Increasing profit and limiting cost is possible with proper interpersonal skills (Hinkel 2015, p.188). A financial manager always needs to be concerned about the prediction of future aspects. A company may have to face risks in the future, so, a company always needs to make a proper plan to overcome uncertain risk. However, skills also required to overcome risks, as financial manager’s skills are the main factors to predict the possible risk (Fleming and Koppelman, 2016, p.314). The economic condition of the country is also needed to be taken care of because economic scenarios can change any business condition. A competitive market creates conflict between different companies and hence the quality and price of a product fluctuate. The data of the company should be transparent and simple in nature so that the financial manager, as well as stakeholders, can understand the data easily (KhodaBandehLou 2016., p.115). In this report, The Royal Bank of Scotland Group which is a private British banking and insurance company separated its insurance division into a standalone insurance company. The standalone company name is The Direct Line Group which was formed in the year 2012. The Royal Bank of Scotland Group need to focus on sustainability as in the year 2008 in the time of economic crisis the company was ordered to sell its insurance business (Binder, 2016, p.365). The company should spread all over the world instead of earning only from the United Kingdom. The reason for European Union regulators ordered the RBS group to sell its insurance business because the company was receiving £45bn in the state. Therefore, to overcome this situation, the company should focus on foreign incomes.


8. Conclusion

It can be concluded that project change, risk and opportunity management is an essential part of an organization. The financial manager and board members always need to be concerned about the uncertain risk and find the scope of opportunities that can maximize the profit of the company. Risk and opportunity management enhances the company’s ability to manage their activity for a better profit figure in the future. The Royal Bank of Scotland was one of the largest banks before the 2008 financial crisis in the United Kingdom. The bank was the fifth-largest bank in terms of market capitalization. However, the bank was receiving £45bn in the state that is the reason why European Union regulators ordered the RBS group to sell its insurance business. However, Paul Geddes separated insurance division into a standalone company in the year 2012. The risk taken by Paul Geddes created the opportunity in a difficult situation and finally, in the year 2012, the price of Direct Line Groups reached the sky. Therefore, a company always needs to be conscious while taking a risk, as a result, it reflects future opportunities.



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Appendix 1:


Figure 1: Governance elements

(Source: Kerzner, 2017, p.104)


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