MANAGING CHANGE IN GHANA REVENUE AUTHORITY

Researchjournali’s Journal of Management Vol. 2 | No. 8 September | 2014 ISSN 2347-8217

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Sugar E. F. K. Adukonu

Compliance, Enforcement and Debt Management

Unit, Ghana Revenue Authority, Takoradi, Ghana

Managing Change

In Ghana Revenue

Authority


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ABSTRACT

The aim and objective of policy-makers is to change the face of revenue mobilization by eliminating

duplicated functions, improve compliance level and reduce compliance and administrative cost. This study

was aimed at examining how the integration of the revenue agencies is being managed, the challenges and

how they are being managed and the lessons learnt that will guide future change managements in the

Ghanaian public sector. Both primary and secondary data were collected and analyzed. The mixed-method

design was used where a questionnaire was administered to respondents. An interview was also conducted to

delve into some of the issues that emerged from analysing the data from the questionnaire. A major finding of

the study is that there is a lack of effective communication which is the number one vehicle to drive the

change. The employees believed that the change is not well-planned and does not have momentum although

they believed that when well implemented, the change will lead to enhanced revenue mobilization. Based on

the findings, it has been recommended among others that the modernization must maintain the balance

between satisfying clients and staff needs and its purpose by developing a structure and a culture that

encourage.

Keywords: Change management, Ghana Revenue Authority, Merger

1. INTRODUCTION

The world today is highly competitive and demanding as society is better informed while expecting more

from both public and private organizations. Traditional public processes and institutions are less effective,

insufficient and are not able to satisfy the changing needs of society. According to Organization for Economic

Co-operation and Development (OECD), 2005 as cited in Melchor (2008), globalisation, the wide use of

communication and information technologies, and the coming of the knowledge society, among other factors,

are rapidly changing the world’s order. This has created new challenges to nation-states as people’s

expectations from government have increased; job seekers are demanding more on the job training, with

societies calling for more investment in education, health, and society but unwilling to pay more taxes.

Melchor (2008) noted that public managers are expected to improve the performance of their organisations

focusing on efficiency, effectiveness, and propriety which were not the priorities 50 years ago. Therefore, to

be able to respond to a changing environment, the public sector has to transform its structures, processes,

procedures, and above all, its culture.

Furthermore, merger and integration of revenue agencies is the order of the day and Ghana cannot afford to be

left out. Institutional mergers such as revenue agencies and educational bodies have been undertaken with the

view to achieve a variety of goals in a wide range of national systems. All over the world, the move towards

bigger institutions is driven in part by government’s intention to widen participation and reduce wasteful


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overlaps in operations. Often cited reasons for mergers, integrations and acquisitions are expectations

regarding economies of scale in geographically adjacent institutions, efficiency and effective management of

the new born organization. It is claimed that within a merged and unified administration, purchasing, estates

management and information technology provision produce substantial savings (Light, 2002; Gould, 1997).

Change has become an important issue to all stakeholders of organizations both in the public and private

sectors. As shareholders (owners) want improved results, efficiency and effectiveness, employees want better

conditions of service, job security among others during and after the period of change while government

would be looking for lower cost, effectiveness and efficiency. The public would be expecting the combined

operations of the GRA to lead to a lower cost to businesses and individuals as a result of improve

management performance. The leadership of the agencies will be expecting increased status and power or

receipt of a substantial pay-off. Thus, every stakeholder expects some benefit if the integration is carried on

well. As a result, the issue of managing change will continue to gain greater prominence around the world.

1.1 AN OVERVIEW OF GHANA REVENUE AUTHORITY

The Ghana Revenue Authority (GRA) is a statutory public organization charged with the administration and

mobilization of tax revenue for the state (i.e. Value Added Tax, Income Tax, Custom and Excise duties, and

Communication Service Tax among others). The Authority was established in the year 2009 under the Ghana

Revenue Authority Act (Act 791). It is an amalgamation of the three revenue agencies namely Value Added

Tax Service, Custom Excise and Preventive Service, and Internal Revenue Service.

Prior to the setting up of the GRA, the three revenue agencies operated autonomously under different laws

that regulated their operations. The agencies had separate Boards, Commissioners and managements. These

agencies over the years have undergone various forms of transformation under different governments. Under

the government headed by President John Agyekum Kuffour, the boards of the agencies were merged to form

the Revenue Agency Governing Board (RAGB). It was therefore not surprising that upon assumption of

office in January, 2009, the government led by President John Evans Attah Mills decided to merge the

agencies to form one revenue authority in line with the current trends the world over.

As noted by Melchor (2008) change management has been identified as a critical variable for the success or

failure of a reform in the public sector such as the merger of the revenue agencies. A reform policy may fail to

achieve change, may generate unintended results or face resistance from organisations and/or individuals

whose interests are affected. As a result, policy-makers and politicians have to pay particular attention to

issues such as leadership, shared vision, sequencing, resources for change, and cultural values while designing

and implementing change.

Over the years changes have taken place in the public sector all over the world and Ghana in particular. Since

the process for merging the three revenue agencies was initiated, not much study has been conducted to


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ascertain how the changes were managed and any lessons that can be learned to guide future mergers. This

study, therefore, was aimed at examining how the integration of the revenue agencies is being managed, the

challenges faced, how they are managed and lessons learnt that will guide future change managements in the

Ghanaian public sector.

2. REVIEW OF RELATED LITERATURE

This review presents a background of the change management concept approaches used by various change

managers and how it is being practiced at the GRA.

2.1 CHANGE MANAGEMENT

Change management is a structured and strategic approach to initiate and manage the change process in an

organization structure and culture. The Encarta 2007Dictionaries define change as to exchange, substitute, or

replace something. Change is the only constant process which exists in organizations and can be small or

large, evolutionary or revolutionary, sought after or resisted. Change is an intrinsic aspect of every business,

especially, healthy businesses that innovate and readily adapt to shift in the market. For an organization to

remain healthy, it must be capable of effectively and efficiently handling change. It must be able to execute

change with minimal cost and risk of business disruptions (Doherty and Waterhouse 2006; Armstrong, 1994).

Yoder-Wise (2007), indicated that because revenue agencies operate in open systems, they are receptive to

external and internal influences from rapidly changing revenue mobilization system. Organization-wide

change depends on the organization’s stage of development, degree of flexibility and history of response to

change as well as the maturity of its system. The role of change agents is to lead change efforts through

thinking of systems and theories based on change, tolerance of ambiguity and being mindful of the whole

picture.

2.2 PROCESS OF CHANGE AND STRATEGIC DRIVEN APPROACH

Change is the process of analysing the past to elicit the present actions required for the future. It involves

moving from a present state, through a transitional state, to a future desired state after several scenarios

evaluated and the best option chosen (Kanter, 1984; Armstrong, 1994). It is very important to decide how to

move from the current state to the future desired state.

Managing change process in the transitional state is a critical phase of the change process. It, therefore, has to

be iterative, cumulative and reformative-in-use process. The problems of introducing change emerge here and

have to be managed. These problems can include resistance to change, low stability, high levels of stress,

misdirected energy, conflict and losing momentum. It is, therefore, relevant to do everything possible to

anticipate reactions and likely impediments to the introduction of change to avoid failure. The organization


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members have to be made aware of the mission and strategy (Armstrong, 1994; Pettigrew & Whipp, 1991;

Beitler, 2006).

The first step is for the organization leaders to craft a strategic plan that clearly communicates how senior

management intends to fulfil the organization’s mission. Once the organization has a well-crafted and well-

communicated strategic plan, the change managers must determine if the current organizational structure,

culture and human processes will support the change strategy. Beitler (2006), noted that attempts to

implement the best-crafted strategy will fail if the organization’s structure, culture and human processes are

not supportive.

2.3 CREATING READINESS FOR CHANGE

Organizational change involves moving from the known to the unknown. Because the future is uncertain and

may adversely affect people’s competencies, worth and coping abilities, organization members generally do

not support change unless compelling reasons convince them to do so. Organizations also tend to be heavily

invested in the status quo and they resist changing it in the face of uncertain future benefits. The key issue,

therefore, in planning for action is how to motivate commitment to organizational change (Cummings and

Worley, 2000; Kumawu & Kraus, 2007).

Peoples’ readiness for change depends on creating a felt need for change. This involves making people to be

so dissatisfied with the status quo that they are motivated to try new work processes, technologies or ways of

behaving. Cummings and Worley (2000) add that creating such dissatisfaction can be difficult, as anyone who

has tried to lose weight, stop smoking or change some other habitual behaviour knows. There is, therefore, the

need to generate sufficient dissatisfaction to produce change. The authors posited that change agents have to

1) sensitize organizations to pressures for change; 2) reveal discrepancies between current and desired states;

and 3) convey credible positive expectations for the change.

Change no matter the form and the magnitude need to be analyzed. Experts of the field have presented various

tools for analyzing or creating the readiness for change. Three of such tools are triangle of; where three

overlapping triangles represent 1) current situation (entire logistics, attitude, behaviours, methods, processes

and procedures etc) that people are dissatisfied with, 2) the new desired state which has been envisaged for

the organization (new methods of doing things, new culture and corporate etc), and 3) things in the old state

that are good and need to be adopted and taken along to the new state. The second tool is a successful change

effort which is a change formula developed to aid change managers to initiate and manage change. The

formula is Where SCE= Successful Change Effort, D is dissatisfaction with the

current state, V= Vision for the desire state, Fs= First small step to implement the change, O=Ownership of

the new vision and B= Believe in the desire future state. (Please see Kumawu and Kraus, 2007 for details).

The third tool is forcefield analysis, a practice given by Lewin (1943). He believed that in every


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organizational situation no matter how dysfunctional it is benefits some people. And this group of people will

try all their might to resist change. Lewin believed that the status quo is a result of driving forces and

restraining forces. The driving forces push or drive for change while the restraining forces exist because some

parties benefit from the status quo and therefore resist all efforts to change it. The driving forces may include

new personnel, changing markets, changing attitude towards work, internationalisation, social transformation,

increased competition, new technology among others. The restraining forces may include fear of failure, loss

of status, inertia (apathy), fear of unknown, strength of culture, sunk costs, lack of resources, contractual

agreements and corporate culture. According to Lewin, the danger is that change managers would be tempted

to increase the driving forces to weaken the restraining forces. He believed increasing the driving forces

would result in an escalation in the restraining forces against change. This is because those resisting the

change are usually highly motivated. The best practice is finding ways of reducing the restraining forces

instead of increasing the driving forces.

2.4 MANAGING AND OVERCOMING RESISTANCE TO CHANGE

People resist change when they think that it will not be in their interest or cause them to lose something of

value. According to Cummings and Worley, (2000), change can generate deep resistance in people and in

organizations, thus making it difficult, if not impossible, to implement organizational improvement. This is

due to the fact that change can generate considerable anxiety of letting go of the known and moving to an

uncertain future. Griffin, Banerjee and Wignaraja (2006) noted that public sector organisations are often

perceived as resisting change and many public sector organisations seek capacity but not change.

Paton and McCalman (2008) on the other hand suggested that no matter how welcoming an organization is to

change, it will still face a degree of resistance to change because success and power bases are routed in the

past and present and there would definitely be detractors. Additionally, Hayes (2010), Kotter and Schlesinger

(1979) and Zaltman and Duncan (1977) identify four main reasons why people resist change which include 1)

parochial self-interest, 2) misunderstanding and lack of trust, 3) different assessment by various stakeholders

and 4) low tolerance for change.

Paton and McCalman (2008) and Lee (2011) postulate that resistance to change can be reduced through

creative organizational design and development but cannot be eradicated. Understanding, therefore, that there

will be resistance to change will help one anticipate resistance, identify its sources and reasons, and modify

one’s efforts to manage the issues of change to ensure the success of one’s change efforts. As a result,

managers must be aware of the impact of their actions. They continue that effective communication often

holds the key to successfully unlocking the door to change.


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2.5 PUBLIC SECTOR CHANGE IN GHANA

Reforming the public sector is a complex matter. Research has shown that most of the changes in the public

sector the world over are engineered by governments with few of them arising as a result of independent

initiatives by the organizations involved. Change management in the public sector is not easy and it requires

making painful decisions and transformational leadership. According to Dordunoo and Dogbey (2001), Ghana

was one of Africa’s success stories in the 1990s after initiating a comprehensive programme of structure

adjustment in close cooperation with the World Bank and the International Monetary Fund (IMF) in 1983.

Other reform policies in the public sector moved to liberalize the economy, deregulate and cut the size of the

public sector and privatize many public enterprises through divestiture and other institutional renewal

mechanisms. Mutahaba and Kiragu, (2002) noted that in many cases the reform policies created a

demoralized and unmotivated public sector, largely incapable of performing basic functions. Other studies

also noted that reforms in the public sector in Ghana are essentially externally driven and thereby lacking the

full commitment of some senior members of the Ghana Civil Service.

One of such institutional renewal is the transformation of Ghana Institute of Management and Public

Administration (GIMPA). In 2001, GIMPA embarked on transforming the school from state dependency to

self-sustaining (financing) with a new structure. By 2008, GIMPA has successfully transformed itself from a

struggling Management Development Institute into a comprehensive university and centre of academic

excellence for developing human capital to meet the challenges of today and the future. It has been able to

transform itself into self-financing instate by diversifying its resource base (Koranteng, 2008). According to

Koranteng (2008), GIMPA’s success is potentially, replicable in other public sector institutions. What is

needed is strong visionary leadership to lead the transformation process, dedicated staff and supportive

governing body that operate on modern corporate governance principles.

2.6 TAX REFORMS IN GHANA

The revenue structures of most developing countries have not been as productive as desired. Too often the

growth in revenue has failed to catch up with government spending pressures, a situation that has occasioned

huge imbalances between the demand and supply of public budgetary resources. These countries have then

had to reform their tax structures, with the general objectives of revenue adequacy, economic efficiency,

equity and fairness, and simplicity (Osoro, 1993 as cited in Muriithi & Moyi, 2003). The main factors

contributing to an improved revenue performance are changes in tax legislation, tax administration and

minimal tax evasion (Morrisset & Izquierdo, 1993 as cited in Muriithi & Moyi, 2003).

Tax reforms undertaken in Ghana centred on removing the revenue institutions from the Civil Service and

granting them operational autonomy, with a view of improving efficiency through enhanced work and

employment conditions for staff of the revenue agencies. Bird (2004) argued that tax administrative reforms


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are essential to success of any tax policy reform and cannot be neglected. It is however, noted that reforming

tax administration is more difficult than any other type of tax reform.

As part of the public sector reforms in Ghana, two practical steps were taken in 1985 to strengthen revenue

administration in the country. These led to the establishment of the National Revenue Secretariat (NRS) and

the creation of the two major revenue agencies, the Customs, Excise and Preventive Service (CEPS) and

Internal Revenue Service (IRS) as autonomous institutions outside the normal civil service in 1986 under the

PNDC Law 144 of 1986. The National Revenue Secretariat had a complete responsibility for supervising the

activities of the two revenue institutions and recommending revenue policies directly to the government.

Another reform in 1995 saw the establishment of Value Added Tax Service (VATS) by an act of Parliament,

Value Added Tax Act, 1994 (Act 486). It was to be responsible for the management, administration and

collection and accounting for the Value Added Tax imposed by the VAT Act, 1994 (Act 486) which came to

replace the Sales and Service Taxes collected previously by CEPS and IRS respectively. However, the VAT

was withdrawn barely 105 days after inception on March 1, 1995 due to public outcry and social unrest. The

Act was therefore repealed on 13th June, 1995 as a result of which the Service ceased to exist. On 30

th

December, 1998, the VAT Service was re-established under the Value Added Tax Act (Act 546) with the

responsibility of administration and collection of Value Added Tax and Domestic Excise which replaced the

Sales and Service collected by CEPS and IRS respectively.

Since the introduction of VAT till the current reform of merging the revenue agencies, there have been minor

reforms. These minor reforms included the introduction of National Health Insurance Levy (NHIL), the

Communication Service Tax (CST), the VAT Flat Rate Scheme (VFRS), the creation of the Revenue

Agencies Governing Board (RAGB) to oversee the activities of the three revenue agencies (VAT, IRS, and

CEPS) and the Large Taxpayer Unit (LTU), among others.

The current reform of merging the three revenue agencies into one revenue authority is aim at ensuring lower

administrative cost, higher productivity and customer-centred service delivery. The strategy for achieving the

integration and modernization involves, Revenue Integration Programme, Customer Service Delivery,

Physical Infrastructure, Human Resource and Organization Development, and Unified Information

Technology and Management Information System.

3. METHODOLOGY

A common goal of research is to collect data which is representative of a population. McNeil and Chapman

(2005) argued that there is no perfect solution to any approach to research, only a series of compromises.

Amaratunga, et al (2002) also suggested that because there are various research choices, the researcher must


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justify the approach chosen since each technique is associated with a distinctive means of collecting and

analyzing data.

This study seeks to enquire into the change management, the challenges, staff perception and motivation. In

line with this, a mixed- method approach was adopted using both qualitative and quantitative methods. This

design was used to enable the researcher gain insight into how the process of integration is being managed.

The population for this study was all staff of GRA and selected stakeholders in five selected regions namely;

Western, Central, Ashanti, Greater Accra and Upper East regions. The stakeholders who were involved in this

study were the registered taxpayers and the accounting and consultancy firms (referred to as professionals).

For the purpose of the study, three sampling methods were used to select respondents. These included simple

random, stratified and purposive sampling methods. Five regions and offices in those regions were randomly

selected. The staff were then stratified into three groups namely, Management, Senior and Junior staff. The

questionnaires were administered to members of each group in all the offices selected. In all 200

questionnaires were sent out, however, 178 questionnaires were returned. The breakdown as follows: Central

– 30, Western – 54, Ashanti – 25, Upper East – 20 and Greater Accra - 49. In the case of the purposive

sampling, the GRA Project Team Director was interviewed on the merger and how the change is being

managed.

Two instruments were used to obtain data these were administration of questionnaires and conduction of

interviews. The questionnaire comprised 41 closed-ended statements that were administered on the staff of

GRA. The themes covered in the questionnaire included change management process (approach), change

management techniques, and staff perception and motivation. The interview guide was administered on staff,

stakeholders and the GRA Project Director. The data was collected within the period of September 2010 to

April, 2011

4. RESULTS AND DISCUSSION

4.1CHANGE MANAGEMENT PROCESS

The study sought to find out the change management approaches employed and it effectiveness. The results

revealed that 92.14% of respondents noted that the motivation for initiating the change is to maximize

revenue collection of the agencies and another 83.71% also stated that the change is aimed at enhancing the

capacity of both the staff and the authority. This, therefore, supports the assertion of all stakeholders (staff,

management, business people and professionals) who were interviewed that there is the need to improve tax

revenue mobilization in the country. For example, a staff believed that the integration would make it easier for

the taxpayers to comply and serve as one stop shop for them. One staff respondent noted that “the tax

environment has become so dynamic as a result of changing business operations such that time has become a


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valuable asset”. Another person said “time spent will be reduced and quality of work enhanced thereby

blocking loopholes in the tax system”. However, they were few people who did not believe the integration is

the best way. One such person said “I do not know this as a fact except that I am told it will”.

Interactions with other stakeholders such as traders, tax consultants and professionals produced mixed

responses. For example, one respondent noted that “with the merger, time spent by revenue officers in a

trader’s premises will reduce since these revenue officers who visit traders for audit would have to cover all

tax types”. Another respondent also said “We do not have to keep separate records for the agencies and we

can pay all taxes in one office”. One respondent commented “I hope the integration will help IRS to reform

and improve their record keeping”. For people in this group, the change is the best thing to happen to revenue

mobilization in the country. There were few, however, who believed that the change will not yield any result.

For example, one person noted “the problem confronting revenue generation is not because the agencies

operate independently but the attitude of officers of the agencies and lack of resources”. There are some who

are neither in-favour of the integration nor against it; for them anything goes. When the Project Director (PD)

was asked why the need for integration, he noted that tax revenue to GDP has diminished over the years and

there is the need to look at ways of improving tax revenue collection in the nation. He also stressed that, tax

administration in Ghana is beset with challenges such as:

Fragmentation of domestic tax administration between Value Added Tax Service (VAT) and Internal

Revenue Service (IRS) resulting in loss of revenue.

Duplicated support functions across the Revenue Agencies with different systems and structure.

Lack of a strong unified headquarters to support and manage the operations of the domestic tax

administration and the customs service in a holistic manner.

Existence of significant weakness in the key functions and business processes needed to administer a

modern tax system.

“Government therefore took the initiative to reform the tax administration by modernizing the existing

agencies so as to improve tax revenue collection by focusing on functional tax revenue administration,

improved customer service delivery, review of systems and procedures supported by a strong ICT base”, the

PD added. He noted that the reform is aimed at blocking all loopholes in the current administrative set up. “It

is important for the agencies to work collaboratively by using common procedures and processes for doing

things by taking command from one source”, he said. This he said is to deliver tax services more effectively

and at a lower cost of collection and compliance, addressing the deficiencies in the traditional procedures,

systems and structures which are too rigid to respond to international best practices and to adopt modern

business or private management practice that brings efficiency.


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The Project Director noted that, “bringing the agencies together solves the problem of businesses taking

different commands from different agencies, and the dodging or avoidance of penalties as a result of different

record keeping systems currently being practice by the agencies which is not accessible by all the agencies at

the same time”. He added that this would enable the tax administrators to know why a particular business has

to pay penalty on income tax or VAT”.

Almost all respondents saw the need for merging the revenue agencies in Ghana. With this in mind, it is

believed that all would be ready to support the change. This finding is in conformity with change theories that

suggest that, for change to be successful, the people must be dissatisfied with the system. For example,

reports of Harvard Business Essentials (2003, p19), asserted that the second necessary condition for change-

readiness is a high degree of motivation on the part of employees to change aspects of the organization. This

motivation typically results from tangible dissatisfaction with the status quo and an eagerness for something

measurably better. Management should therefore take advantage of the acceptance by almost all to push the

agenda forward.

On awareness creation, 68.54% of the respondents indicated that the change initiative has not been explained

to staff in clear terms. On whether the roadmap towards the integration and the modernization of the agencies

has been communicated to their understanding, 83.15% of them responded in the negative and 16.85% in the

affirmative. In a follow-up question to seek further clarifications, the respondents said they were not satisfied

with the level of communication. One respondent noted that “information about the change flows like rumour

through the offices. You hardly hear from management about the change”. Another person also responded

“they promise monthly newsletters on the change but that also never materialized. You wonder if they

actually mean to merge the agencies”. They added that increased education of officers and the public,

transparency, effective communication, weekly briefs, and constant update of the GRA website would make

them supportive of the change. This relates to the findings of Wikoff who postulate that most business leaders

are ineffective in their communications to stakeholders during transformational improvement initiatives. He

continues that to drive behavioural change towards change, one must communicate the need for change as it

relates to the overall business and to the stakeholders. Paton and McCalman (2008) also postulate that

effective communication often holds the key to successfully unlocking the door to change.

The other stakeholders (traders, professionals etc) noted that they hear and read in the news about Ghana

Revenue Authority but have not seen any change in the operations of the agencies. “All the sign post read

IRS, VAT Service and CEPS, nothing has changed. There is no communication, so we don’t know when the

change will actually happen. Whether in two years, five years or ten years, nobody knows”, another person

noted. Another respondent said that, “change is about communication, how do you say you are merging the

agencies to benefit us but we don’t know what is happening? “Does it mean that they were being forced to do


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it so that they can get loans and grants and were left on the way because of lack of money to implement the

change?” One person said that, “I feel like suing the government for deceiving us that they were merging the

agencies. Wherever you go, you see IRS officers operating separately from VAT officers”. Another person

added that “by now there should have been lots of education on the merger for us to understand what is going

on”. “The government communication team on the change is too slow and not performing, the person added.

They need to change their plan of work and work harder and smarter than they are currently doing” another

complained.

When the Project Director was contacted, he indicated that, education, communication and re-branding is to

be carried out to reduce or eliminate resistance. This is also to assure staff of job security and satisfaction.

Assurance letters of appointment will also follow. He also noted that staff and other stakeholders will be

consulted to solicit their opinion and concerns so that these concerns will be addressed. This is aimed at

reducing the level of anxiety and possible resistance. He, however, added that the various agencies are

carrying out education and communicating the change to the staff at agency levels. This confirmed the

findings of Prosci Inc team survey of 288 companies from 51 countries that project teams tended to

communicate less frequently than they thought they should have during the period of change.

Information sharing and education on the change is very low thereby increasing the anxiety of staff. In

managing the change, the morale of the staff can be damaged at the time of the integration. The natural

uncertainties of the future and its anxieties have to be handled with understanding, tact, openness and

empathy. Communication, clarity of purpose and proper timing are essential as well as rapid implementation

of the change.

On the management of the change, 76.96% of the staff said that the implementation of the integration is being

done from the top with little or no employee involvement. The results indicate that the staff are left out of the

process and would have preferred all inclusiveness. When the Project Director was asked about the staff

involvement, he said “we cannot engage every staff in managing the change”. He however noted that since

the beginning of the change, selected staff from all the agencies were engaged. “The staff held several forums

and seminars and are key part of the change” he added. He explained further that goals and activities of the

modernization of the agencies have been defined in moving the integration forward. These goals he said have

been decomposed into seventeen (17) Project Teams (PT). “This was done by staff at different forums who

determined what to do”. “Twenty-four (24) Project Managers (PM) were appointed to head the 17 PT.

Currently, there are between 86-90 PT members made up of staff from all the agencies” he added. He said the

PMs were appointed based on their training, education, experience and background with the PT members

based upon recommendation. “There were consultations and background checks on them before their


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appointment and the suggested number reduced to the current level. It must be said that the PMs have the

majority say on whom they want to work with” he noted. The 17 PT include a team on change management.

Staff involvement in any change is very crucial. The staff must acknowledge and buy into the need for the

merger. The merger cannot continue unless the members understand and support the reason driving the

change. ESI International (2006) noted in one of its white papers that overwhelming percentage of

organizational change efforts failed because people were not sufficiently considered at the outset of the

initiative. It further noted that it is people within an organization who are responsible for developing and

implementing new processes. For effective transition, as in all good change management, it is important to

include a substantial number of staff of all the revenue agencies on the integration team. The objective here is

to reduce, as much as possible, resistance to the change process.

About 71.35% of respondents indicated that the change was not planned from the onset before

implementation started. When the Project Director was contacted, he said “The PTs are currently working

hard and have developed a timeline, processes and procedures (plan) for the integration”. “These plans are

being put into documentation as Implementation/Modernization Plan” he added. He noted that the document

will be used to source for funding. “The actual implementation will start from here to bring the integration

into fruition”, he said; signifying that no plan was put in place before the implementation and actual

implementation is yet to start. This does not connect with the findings of Freeman (2010) and Beitler (2006)

that if you want to bring about a real change in an organization you have to have a plan from the onset. They

noted that one needs a vision and get people excited about the vision. However, if you don’t have a plan then

nothing much will come out of it. Their view confirms the old saying that, failure to plan is planning to fail.

Mergers such as the modernization of the revenue agencies would succeed when change managers take time

to draw detailed integration plan, have a clear purpose for the integration and proper organizational audit

while avoiding misguided strategy and over-optimism. It is also important to put in place a strategic plan

which determines the procedures to be followed since it has been established that enhanced revenue goal can

be achieved only through the integration of the existing revenue agencies. There is no going back at this point,

and all subsequent steps can be worked out on the basis of the existing chain of decisions.

4.2 CHANGE MANAGEMENT TECHNIQUE

The study tried to find out the change management techniques adopted and how effective they are. The result

is shows that only 35.39% of respondent said management has shown compelling evidence why the agencies

need to be integrated while 73.03% said that management has not taken their time to create a sense of urgency

prior to the implementation of the change. During the interview, respondents said even though they

recognized the need for changing the operational mode of the agencies, management couldn’t demonstrate

why they have to merge the agencies. One respondent said “why can’t they just resource us instead of putting


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us together”. “They claimed Uganda and Kenya have done it successfully and are achieving results. But

Ghana’s economy is different from Uganda which has just come out of war. How can you compare the two?

No evidence”. Identifying the need for change alone is not enough to initiate a change. For the organization

members to let go of certain restricting attitudes, they have to be taken from a state of unreadiness to change

to being ready and willing to take the first step. This includes presenting hard data that cannot be ignored and

inspiring them to achieve remarkable things. It is worth noting that in successful change effort, the first step is

making sure that enough people act with sufficient urgency – with the type of behaviour that energizes and

that beams a sense of “let’s go”.

About 85.39% of the respondent revealed that the staff have not been trained, neither have they been

equipped or encouraged to take actions in delivering the change. Similarly, 79.21% of the respondent

indicated that the role of the staff in the modernization process has not been defined. When the Project

Director was asked he said, the training of staff has started in Accra in basic IT which is needed in the

modernization process. He said about 500 staff have been trained so far and other offices would be considered

when they finish with those in Accra. The finding here conflicts with that of the Prosci Inc team which

postulate that training and clarification of role is the cornerstone in building knowledge about change and the

skills required for successful implementation. Beitler, (2006) also noted that team building, conflict

resolution, mergers, or restructuring interventions are doomed to fail until all the organization members are

aware of the organization’s mission and its strategy to fulfil that mission.

Change in any form demands that people who are affected or would be affected be trained so that they can

play their role very well. Concentrating training at one place means others areas would lag behind. Training

people for integration goes beyond basic IT to skills training among others. The change managers therefore

have to constantly re-appraise the staff requirement and stepping up the training and development of staff to

effectively cater for new challenges.

On the issue of availability of resources and logistics to work with, 93.82% of the respondents said these were

not available to staff. In a follow up interview with staff, they complained that since the initiation of the

integration of the agencies, resources needed for their day to day operations have become scarce. One of the

officers in charge of Information System Support Unit (ISSU) at VAT Service noted “for about six months, I

don’t have certificates to print for newly registered businesses and existing businesses that need extra

certificates for their newly opened branches as stipulated in the law. Even appropriate sheets to print monthly

returns for traders to submit their monthly returns are scarce in the system. I wonder if this would be the case

when we are fully integrated. If things continue this way, I am sorry, they would be revenue lost to the state”.

One deputy head also noted “we are worse off so far as resources are concerned”. “Even my boss’ air-

conditioner has been out of order for a long time now and all efforts to get it repaired or replace it have


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proven futile. This was not the case before the initiation of the change” she added. One of the Regional

Accountants noted that sometimes he does not have imprest to run the office. “My brother, I owe suppliers,

staff out of station allowances among others. The system is worse off” he noted. Harrison (2007) noted that

one of the important functions of the CEO in a transformation change is making the transformation

meaningful. One way of doing this is to provide the resources needed and making the working environment

conducive to motivate staff to put in their best. These concerns of the staff point to a lack of funds in the

system and the fact that the change management plan is now being put into documentation so that it can be

used to seek for funding for full implementation.

From the questionnaire and interview conducted, it was observed that the change management approach

adopted by the GRA team was See-Feel-Change where situations are created to help others visualize

problems, solutions or progress in solving complacency, strategy, empowerment or other key problems.

However, the change is moving at “super snail pace”, therefore staff are not realizing what is going on. It is

also observed that the change is being managed from the top with little staff involvement. The activities

related to the change management are concentrated in Accra and communication is on the low side.

4.3 STAFF PERCEPTIONS AND MOTIVATION

In an effort to find out about the staff perception and motivation towards the change, questionnaire was

administered and interviews conducted. When it comes to staff perception of the change, 71.91% of the

respondent indicated that the specific aspect of the change which will lead to the total transformation of the

agencies has not been planned and implemented to support the change effort. Similarly, 66.29% of the

respondents noted that management or the change managers are not promoting the progress of the change and

the future of the authority.

Interview with staff revealed that even though they saw the need of the change, lack of information is making

them apathetic towards the integration. For example one respondent said “I will only participate in it when I

get sufficient information which will make me interested in participating”. Another also said, “I would take

part when I realize the change will challenge me in my career”. “I will take part in the change if I am made

aware of the positive elements within this change which has not been done so far. Most issues appear to be

shrouded in secrecy”, said another.

They also noted lack of recognition, scepticism, non-consideration of their inputs without explanation and

proving that the change is for a group of people at the top doing their own thing which they don’t understand

will interfere with the support for and participation in the change. This demonstrates that management has to

provide a detailed merger plan and establish a clear purpose for the integration as to how the cultures of the

various agencies will fit together. Furthermore, a policy on various aspects of the merger plan has to be made

available to the stakeholders to avoid a merger failure.


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As to whether the change effort is working, about eighty-three percent (82.58%) of respondents said there was

no evidence to show that the change effort is working. When the respondents were asked whether the change

process has momentum, 79.21% said the change does not have any momentum. Another 78.66% of the

respondents said stakeholders were not consulted when the decision was taken to modernize the agencies.

About seventy-eight percent (77.53%) also indicated that the concerns of the staff were not taken into

consideration in the management of the change.

When the Project Director was consulted he said, the decision to integrate the three agencies namely, Custom

Excise and Preventive Service, VAT Service and Internal Revenue Service is a government policy decision

and, therefore there is no need to consult the staff and other stakeholders whether the agencies are to be

integrated or not. However, there is a point where there would be consultations to take into account the

concerns of all stakeholders. This is when the integration is in its full gear and resistance have to be managed.

He further noted that “the integration is aimed at meeting internationally best practices. It is not an imposition

by any donor agency or consultants who saw the need and made suggestions to government as being alleged”.

The PD added that we need to move forward as a nation and one way of doing that is to improve domestic

revenue collection to bridge the tax – GDP gap.

However, interviews with staff indicated that, they don’t think management and the change agents are doing

well. “The rumour is that it is International Monetary Fund (IMF) imposition as a result, the leaders don’t

know what to do. They are being directed and manipulated by IMF”, said one respondent. “The leaders are

having unnecessary management meetings without taking action”, said another. They noted that those driving

the change are not visible at all and they need to improve on their visibility and be accessible to the staff.

“They should stop the unnecessary management meetings” said another. As noted by Forlaron (2005) (as

cited in Paton& McCalman, 2008), the importance of the human side of change cannot be underestimated,

one must identify and manage the potential sources and causes of resistance and ensure that motivation are

built into new processes and structures, it is therefore, important to professionally implement the change. The

integration procedure and process have to be well articulated and communicated to the staff of the agencies.

The staff will move through the change process more productively if they are encouraged to express their

fears, assumptions and feelings. To achieve success and overcome resistance, change managers have to

devote more time to communication, negotiation and preparation to achieve success and educate them on the

merger process and involve all when appropriate.

About fifty-nine percent (58.99%) of the respondent noted that change when implemented well will lead to

enhanced conditions of service for the staff. When asked about the conditions of service for staff, PD said

accountants and salary experts were brought together who worked on staff conditions of service. He said their

recommendations were given to staff and other consultants after which it is being implemented. “No staff has


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been made worse-off. Staff either moved forward or stayed at the same level in terms of salary because of the

salary differences among the agencies” he added. On the issue of possible power struggle among the

management staff, he said to avoid possible power struggle among the management staff, various ways such

as interview and appraisal would be used to appoint the best people to positions. He, however, noted that

nobody’s title would be taken away from him or her even if the person is not appointed to a management

position because “it is not job for the boys”. For example, if you are Assistant Commissioner (AC) in your

previous agency, you would maintain the title AC even though you may not occupy any position.

About seventy-nine percent (79.21%) of the staff said they have not received any support and encouragement

and as such are not motivated in participating in the change. During interview sessions with the staff, a

respondent said, increased involvement of leadership and staff in the management of the change would bring

about transparency and encourage the staff. “With staff involvement, I can confidently explain any positive

outcome of the change to anyone who seeks to know” another respondent noted. Some of the staff said they

have no hope in the change. “One cannot be sure of job progress. When one is sure of career progression, she

can actively get involved in the process”, said a respondent. Another person also responded “it is difficult to

see any positive impact on me, but it is giving me less interest in the change”.

The respondents also said that they were not satisfied with the level of communication. They noted that

management has not done anything so far to make them feel part of the change. “What would make me

supportive of the change is increased education of officers and the public, transparency, effective

communication, weekly briefs, and constant update of the GRA website” a respondent said. Some suggested

that systems should be put in place before the physical merging of the agencies. Mergers/integrations are

successful when there is trust among the parties and the readiness and potential for merger is assessed. There

is also the need to follow proper change processes that will reduce or minimize resistance and create

ownership on the part of all stakeholders including staff.

Almost 77.52% of the staff believe that the outcome of the change could have been achieved through closer

working collaboration of the agencies without the risks, upfront and opportunity costs which the merger

would inevitably entail. Some expressed the belief that the modernization is simply about transforming

Internal Revenue Service (IRS) from outmoded way of doing things into modern way of tax collection. They

said this could be done without the funfair of the integration. Some also fear that the change may create an

amorphous organization with little or no controls which may lead to revenue loss and watering down of the

system.

They expressed the fear that the new authority would adopt negative cultures from the existing agencies. “As

the organization becomes large, diseconomy of scales would set in, management would have difficulty in

exercising control over a large group of people, specifics and details would be ignored and bureaucracy would


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become the order of the day”, said one respondent. Some also expressed the fear of lack of recognition and

difficulties in getting access to the top. One deputy regional head said, “Before the change their boss in the

Accra always called to find out how they were performing. Since the integration began, nobody has been

called to find out how we are performing”. To avoid upset, cultural differences within the agencies need to be

tackled with sensitivity and tact, to build trust among the various staff. Any lapse in top management

commitment to the task of successful integration and change management may dent the confidence of the

already anxious staff of the agencies.

Generally, the majority of respondents believe that the modernization of the agencies is necessary and will

enhance revenue mobilization. However, they are of the opinion that they are not motivated towards

embracing the change due to lack of information flow and staff involvement in the change process.

On the issue of the challenges being faced by the change management team, the Project Director said, “the

number one challenge being faced is management structure”. He said new organizational structures have been

designed to create a new administrative structure. “With the new structure, we have The GRA Board,

Commissioner General assisted by three Commissioners one in charge of Custom Division, another in charge

of Domestic Tax Revenue Division and the third one in charge of Support Services” he noted. So far, 23

Deputy Commissioners have been appointed to support the CG and his team. Another challenge he noted is

physical office accommodation for management. “Unlike other changes where the new structure was

available before the change started with the new management moving into it, in the case of GRA,

management has to use the office space with the existing agencies” he lamented. “This is affecting the change

and the mind set of people whether the integration is actually taking place since people do not know where

their allegiances lie” the PD complained. He noted however, that they have identified a structure which is

being renovated.

He said the way forward is that there is a plan to re-train staff towards the new operation of the Authority,

look for new ways of doing things and creating opportunities for succession plan where staff have the

opportunity of rising through the rank. There is also a plan to put all information on the Authority’s website

for easy access by staff and the general public. We meet challenges each and every day which come in all

shapes and sizes. Some highlight the resistance we have to change. Some are known and some creep up

behind us and spring a surprise. In the same light, some of the challenges in managing the merger can be

estimated while some will up pull surprises. How the leadership tackles these challenges would help make a

mark on the lives of staff and other stakeholders.


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5. RECOMMENDATIONS

The implication of the finding is that if the change is not handled properly, it can lead to demoralisation of the

stakeholders with grave consequences for tax revenue. For the modernization of the Authority, therefore, to

be recognized as successful and creating a healthy authority, it must strive to satisfy customer needs by

providing great value for the clients, satisfy the needs of its members (staff) by creating an environment

where members develop and grow and believe that they matter while satisfying its economic requirements

(maximizing revenue generation) by using resources most efficiently and effectively. It must maintain the

balance between satisfying clients and staff needs and its purpose by developing a structure and a culture that

encourage.

The change managers have to embark on or intensify consultations with the staff and formulate policies so as

to reduce the level of anxiety, anger, complacency and fear of the unknown future thereby reducing or

eliminating possible resistance. Fears and concerns raised by people are important to them even if they are

baseless. So it is important to address such concerns thoroughly. The consultations will enable the members

of GRA to identify their weaknesses and strengths and design the best solutions themselves.

Education is very crucial for any change. Management therefore need to undertake massive education of both

staff and the general public on the change (vision and the established plans). This can be done through

monthly briefs and constant update of the GRA website with information on the modernization process so as

to keep all stakeholders up to date. Regional change agents should be established in all the regions to be the

link between staff and the national change team. The organizational structure should be redesigned to reduce

the layers to make decision process less bureaucratic. There is also the need to for organizational audit of the

existing agencies to identify the various cultures that exist in the exist in the agencies and take steps to

promote the helpful ones while addressing the negative cultures

One group of people who cannot be ignored are the internal stakeholders. Consultation and involvement of

internal stakeholders to identify internal challenges and focus attention on addressing these challenges are

crucial. The staff should not be made to feel isolated. Efforts should be made in identifying factors that may

serve as de-motivation for staff (the restraining forces) and factors that would make it favourable for the

change to be implemented successfully. As indicated in the Lewin’s Forcefield analysis, the change mangers

have to find ways of dealing with the restraining forces so as to reduce its strength.

6. DIRECTIONS FOR FURTHER RESEARCH

The findings of the current research provide avenues for future research. There should be a study at the end of

the modernization to determine how successful it is and issues arising out of the modernization. There should

be another study to determine whether the integration/modernization has enhanced revenue mobilization.


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