Change Management towards Successful Merger - Essay Example

Change Management towards a Successful Merger: Especially people focused through value building and culture change This paper is an investigation into how mergers can affect the workforce, and how change management can be implemented to minimise any negative effects on the workforce. As frequent and pervasive change is becoming a fact of life due to challenges in the competitive environment, the number of mergers, particularly international mergers has increased. Even though human resource issues are important to an organisation, some mergers do not deal with this function effectively. The aim of this study is prove how an organisation's employees are the most valuable asset during a merger process and it also seeks to determine the best strategy for change management in relation to the human resources element. This will be achieved by undertaking a questionnaire based survey in organisations that have undergone mergers and by undertaking in-depth analyses of case studies selected using non-probability sampling methods. There are limitations to using both questionnaires and the non-probability sampling methods, however by contacting the human resources departments, the study is increasing the probability of gaining a valid response; and whilst the non-probability sampling method may not produce statistically significant results, the case studies are part of a qualitative study, and it would be beyond the scope and resources of this study to undertake a study that would produce statistical significance. Introduction Organisational values are more important in the personal and societal context within which business operates. It is becoming more important to identify the organisation and what it stands for the customer, and these values are important to the majority of stakeholders (Barrett). Organisational culture is also important for determining an organisation's capacity, effectiveness and longevity (Woodbury 2006), and it also contributes significantly to the organisation's brand image. When this culture does not align with mission, core values, and operational strategy it can turn into a significant liability for the organisation, and this is more pronounced when the organisation undergoes change (Woodbury 2006). Therefore culture change is a result of the organisation moving away from its original mission, goals, and strategies, a process which is more associated with mergers. When the culture change occurs the organisation has to focus on building the values of the new organisation and this involves; making the organisation's values meet the society's expectations, making values meet the needs of new shareholders, attracting the best people/employees for the organisation and retaining the best people (Barrett). Value building is even more important when an organisation is undergoing a culture change as it can affect how existing employees feel about the organisation and it will also affect the ability of the organisation to attract the best employees. Research has shown that corporate performance is strongly correlated with employee fulfilment, with 39% of corporate performance variability being attributed to the personal fulfilment of employees (Barrett). Employee fulfilment is also strongly correlated with the leadership skills and emotional intelligence of managers, with 69% of employee fulfilment variability being attributed to qualities of leadership of the manager or supervisor (Barrett). With these figures, organisations need be aware of the mechanisms for value building and culture change which include ensuring employee fulfilment by providing: physical fulfilment (remuneration, canteen, gym), emotional fulfilment (professional growth, work appreciation), mental fulfilment (accountability, creativity and personal growth), spiritual fulfilment (opportunity to be service) (Barrett). During a change management process, the organisation undertakes a variety of processes to make this process effect. The engineering process of value building and culture change requires strong leadership to shape the culture into one of commitment rather than mere compliance (Krueger 2004). And the goal of this process is to create new and powerful cultural norms. This engineering process involves gathering and forming a leadership group, to facilitate new behaviours and a new culture. The leaders then communicate the case for change to all employees and this can be achieved by defining the purpose of the organisation and why it exists, by defining the core beliefs and behaviours that define how the organisation will agree to be with each other and stakeholders and by describing how this change will manifest itself (Krueger 2004). In a study by Gertsen et al (1998) they claimed that high failure and disappointment rates in mergers are often recognised as negative employee reactions by an organisation's researchers and practitioners. They also found that the problems involving the human side of mergers are observed typically in terms of cultural conflicts and acculturation between the companies being united (Gertsen et al 1998). Aims and Objectives The aim of this study is to prove how an organisation's employees are the most valuable asset during a merger process. This study also seeks to determine what the best strategy for change management is in relation to the human resource element. This will be achieved by reviewing the literature on the nature and principles of successful mergers, change management in terms of culture change and value building and the workforce as an asset to an organisation. Proposed Methodology This research will be both descriptive and explanatory; because descriptive data will be collected from questionnaire-surveys. Explanations will also be given for the factors related to successful mergers in terms of employee satisfaction and perception of the change management process. This study is a qualitative study as there is the collection of open ended information with the primary intent of developing themes from the data (Creswell 2003). Although some of this information collected will have a quantitative element to it, this will ensure the validity of the study especially if both the qualitative and the quantitative study reach similar conclusions. Research Strategy Case studies are normally used where there is a need to gain a rich understanding of the context of the research. The data collection method in case studies may include questionnaires, interviews, observation and documentary analyses (Saunders et al 2003). Yin (2003) also defined a case study as an empirical enquiry that investigates a contemporary phenomenon within its real-life context, especially when the boundaries between the phenomena and the context are not clearly evident. Whilst single case studies involve very in-depth investigation of the topic, multi-case studies tend to produce more powerful analytical conclusions, therefore these have been chosen for this study (Yin 2003). Multiple case studies will also give this study the opportunity to better understand the findings and detect any differences and similarities among the different cases. Sampling Sampling should allow the researcher to select some elements of the population to draw the study's conclusions on, and sampling is usually employed on the basis of lower costs, greater accuracy of results, and greater speed of data collection and the availability of population selection (Cooper and Schindler 2003). The selection of the sampling method depends on a number of factors, such as the nature of the study, its objectives and the time and budget available. Non-probability sampling will be used as it provides a range of alternative techniques that depend on the researcher's subjective judgement (Saunders et al 2003). With this sampling method the selection of elements for the sample is not necessarily made with the aim of being statistically representative of the population. The researcher uses subjective methods such as personal experience, convenience and expert judgement to select the elements in the sample. Therefore the probability of any element of the population being chosen is not known (Samuel et al 2003). Reflections Potential obstacles The limitations of this study include potential low responses to the questionnaires which are expected of organisations that could have recently undergone a merger, and it is also characteristic of organisations that are performance driven. However, by approaching the human resources departments as well, this limitation can be minimised. The preferred mode of communication would have been face-to-face communication with physical interviews and ones that are usually facilitated by introductions; however this could introduce potential delays into the study, and significantly increase the cost of the study. This limitation can also be subdued by the use of case studies, as they allow a direct comparison with secondary sources of information as this should correlate for more likely circumstances. The sample size is likely to be small and this is associated with the low response rate for questionnaires. A survey could have been used to collect this information, however surveys are used for larger groups and this study does not have the capability to expand its methods to support this method. Conceptual and theoretical problems and difficulties The sampling method is not intended to show any statistical significance simply because this would entail more field work which translates into higher costs and increases the researcher's probability of failure. Statistical significance would also require the use of recognised statistical software, for example, SPSS; however this would certainly introduce complications for the researcher and would not support the aims of the study. This study seeks to understand a concept rather than predict a trend and this is incompatible with statistical methods. Ethics There are no ethical issues with this study as there are no vulnerable groups are being contacted or approached; hence there can be no claims for coercion to participate. No payment is being offered in exchange for completed questionnaires. By going through the HR departments, this study is following ethical protocols in that the organisation is aware of the research, and hence cannot become suspicious of it. My position as a researcher in a political field, and how this will impact on the study. As a researcher this research has the potential to produce new information and new insight into the problems associated with mergers. This is even more significant when one considers that a large number of mergers are now international, and no longer just limited to mergers in the UK or mergers in the US. It is now commonplace to have an organisation in China merging with an organisation in the UK. This introduces a political aspect to the research as international mergers often result in job losses. This has been reflected by the takeover of Rover by BMW, which failed and ultimately resulted in job losses. Likewise the merger between Corus and the Dutch steel company resulted in job losses and a decline in manufacturing output. The employees affected or who are made redundant need to find alternative employment, and this means the creation of new jobs to maintain the state of the economy. Therefore, as a researcher in the political field, there is knowledge to be gained on employment issues on a broader level, and this political influence can enhance the study by introducing a political perspective, which may have ignored or overlooked. Conclusion It is clear that the workforce is a valuable asset in any organisation, and this aspect often tends to be overlooked even in normal business operations. When organisations merge, they undergo change management processes that require the organisation to change its culture and evaluate its value building processes. The important factor in these two aspects involves employees at the core of the entire change management process, as they are central to the organisational culture and its values. More research needs to be conducted in this area, as in most cases the employees of the merging organisations tend to be affected and somewhat forgotten in the entire change management process. This seems to be a contradiction to value building and changing culture which almost solely depend on the input of the employees. A combination of case studies and questionnaires will be used to obtain information on change management processes during mergers to ascertain the levels of value building and culture change occurring in organisations, and whether these are successful. In order to determine this, the researcher will proceed with undertaking a review of the literature on change management and mergers, as well as the importance of culture change and value building, in order to carry out the questionnaires and understand the case studies. Timetable Start Date Completion Date Introduction 15 May 2006 18 May 2006 Literature Review 19 May 2006 24 May 2006 Questionnaire 20 May 2006 25 May 2006 Methodology 21 May 2006 22 May 2006 Results 26 May 2006 28 May 2006 Discussion 29 May 2006 30 May 2006 Conclusion 31 May 2006 31 May 2006 References & Formats 01 June 2006 02 June 2006 References Blake, S (2006) "The effects on employees of mergers and acquisitions activity, communication is key" Prism's Telecommunication, Media and Advanced Technology. Bedford Group (2002) "Change Marketing" The Bedford Group. http://www.bedfordgroupconsulting.com. Page last accessed 6 May 2006. Cooper, D R & Schindler, P S., (2003) "Business Research Methods 8th edition, McGraw-Hill Companies Inc. Creswell, J W (2003) "Research Design, Qualitative, Quantitative and Mixed Methods Approach, Second Edition, Sage Publication, Inc Fedor & Herold (2004) "Effects of Change and Change Management on Employee Responses: An Overview of Results from Multiple Studies" Tappi Fall 2004 Technical Conference. Georgia Institute of Technology. Galpin, T., Herndon, M., (2000) "Merger Integration: The Ultimate Change Management Challenge" The Complete Guide to Mergers and Acquisitions. M&A Consultants. Gertsen, M C., Soderberg A M., Torp, J E (1998) "Cultural Dimensions of International Mergers and Acquisitions" Walter de Gruyter GmbH, Berlin Samuel et al 2003 Saunders, M., Lewis, P., Thornhill, A. (2003) "Research Methods for Business Students 3rd Edition" Harlow, Pearson Education Ltd. Tetenbaum, T J., (1999) "Seven Key Practices That Improve the Chance for Expected Integrations and Synergies" Organisational Dynamics. Vol 28. Issue 2, pp.22-35 Yin, R K. (2003) "Case Study Research: Design and Methods" Thousand Oaks. California, Sage Publications Ltd Bibliography Adolph, G. (2002) "Merger Perspectives - A Context for Successful IT Integration" Fall 2002 Federal CIO Summit, Booz, Allen, Hamilton, Florida. Adolph, G., Elrod, K., Neely, J., (2006) "Nine Steps to Prevent Merger Failure" Harvard Business School Akingbola, E B., (2006) "Change Management and Capacity Building For Regional Banking Leadership" Intercontinental Bank PLC. Alaranta, M. (2005) "Integrating the Enterprise Systems after a Merger: Managing the Change in a Manufacturing Company" Turku School of Economics and Business Administration. Finland. Bert, A., MacDonald, T., Herd, T., (2003) "Two merger integration imperatives: urgency and execution." Strategy and Leadership, Volume 31, Issue 3, pp.42-49 Conner Partners (2004) "The Leader's Challenge: Installation or Realisation" White Paper, http://www.connerpartners.com. Page last accessed 06 May 2006 Dutton, W H. (2006) "The Social Informatics of the Internet: An Ecology of Games" Oxford Internet Institute. University of Oxford, London. Eriksson, M., Sundgren, M. (2004) "Managing Change: Strategy or Serendipity" Scandinavian Academy of Management and the International Federation of Scholarly Associations of Management, Sweden. Instead Quartely (2003) "Change and Risk Management" Issue 6 International Labour Organisation (2003) "Conclusions on the employment effects of mergers and acquisitions in commerce" Tripartite Meeting on the Employment Effects of Mergers and Acquisitions in Commerce. Geneva. Johansson, E., Petterson, C., (2006) "Mergers: How Companies Prepare For it" Lulea University of Technology, McGuire, R. (2003) "How to Manage Change" The Pharmaceutical Journal. Volume 270, pp. 161-2 McKnight, S (2002) "Managing cultural change: the challenge of merging library services, curriculum development and academic professional development" 68th IFLA Council and General Conference. O'Connell, W J. (2002) "Merger Due Diligence" Legal Times. Volume 25, Issue 49 Strine, L E. (2006) "Toward a True Corporate Republic: A Traditionalist Response To Bebchuck's Solution for Improving Corporate America" Havard Law Review, Volume 119, pp.1759 - 1783. US Army Corps of Engineers (2003) "The Change Imperative" Aligning USACE For Success in the 21st century. Walker, D M., (2005) "Human Capital: Preliminary Observations on Proposed DOD National Security Personnel System Regulations" United States Government Accountability Office Appendices Draft Questionnaire Section A This section will deal with the nature of the merger and will involve the following options: Section B This section contains common strategies used to deal with resistance to change from employees, and the study seeks to determine when and how often these strategies were implemented. Section C This section will assess the effectiveness of any strategies to incorporate employees in the merger and change management process. How did you participate in the merger process and what did it involve If negotiations were undertaken, what were the main issues and topics of these negotiations Section D This section will assess whether employees feel they are a valuable resource to the organisation before and after the merger. Do you think your position is important in this organisation If yes, why Do you feel valued as an employee Give reasons for your answer. Has your level of job satisfaction changed since the merger What do you think could have been done better by the two merging organisations Thank you for your participation Read More