Table of Contents
Overview of LOK Consulting Limited
We are consulting firm specializing in organizational behavior and change. LOK Consulting was founded in the year 1990 on the principles of developing and delivering high-quality consultancy services. Our services leadership training, managing organizational change, leveraging organizational behavior for success and workforce motivation.
Your organization is just coming out of a successful merger of two companies. You are now at the critical stage of integrating the cultures of the two organizations into one and leveraging the combined capabilities for business success. This can be costly to the new company if not effectively managed. The morale of employees could drop, materialization of the anticipated synergies may fail and adversely affect the performance of the new organization.
A major cause of troubles of merger transitions is culture clash. A recent Delloite survey of business executives who have handled organizational mergers showed culture clashes, change management and leadership problems as the major causes of challenges in mergers. The two companies definitely had different cultures as well as leadership styles and perceptions of the merger process. This program will help you as an organization the challenges of cultural integration and ensure a smooth change.
The program will benefit your management teams with leadership trainings for managing change, motivating employees, communicating the expected changes, monitoring the progress of change, minimizing cultural clashes and managing conflicts. Ultimately the program will help your management teams effectively align the employees from the two companies towards the desired culture of the new organization.
Strategic management of Mergers
Mergers and acquisitions (M&As) are often used by business organizations to achieve growth and expansions with far reaching impacts on the workforces at all levels of the merging companies. It involves two or more companies coming together under a common structure of ownership and management. Acquisitions on the other hand involve an organization taking control over another through stock swaps or buyoffs. Often failure by mergers to achieve the strategic and financial goals is attributable to factors such as cultural clashes, differences in management styles, fall in levels of employee motivation, poor communication, loss of key talents, low trust levels and uncertainties about the future.
These challenges with mergers revolve largely around the people and hence HR must play a very important role in change management during mergers. The manner in which the organization handles employees before, during the process and after merger transactions has a determinative impact on the merger’s success. Employees of the two organizations obviously have mixed feelings that include the feeling of uncertainty, fear, resistance or enthusiasm. These are emotional reactions that will occur at all levels of the organizations and must be effectively addressed to ensure the success of the merger process (Agrawal, 2012).
One very important strategy the newly merged company can utilize so as to maximize on organizational behavior, while minimizing cultural clashes and conflicts is effective creating a guiding coalition. It will be of strategic importance for the new organization to form a team with enough authority to spearhead the process of change. The power can be derived from their position, level of expertise, experience and leadership competence. Teamwork is important in the coalition. The members must have strong sense of trust and work for the common goal of supporting the merger’s success. The teams should regularly meet and discuss progress as well as disseminating the information throughout the organization so that every employee understands the direction of the new company.
Another strategy is develop a clear merger vision and strategy. A merger cannot be successful when there is no clear vision for the people. There should therefore be a clearly crafted vision of the future as well as the benefits every person in the organization will get. Employees must be sufficiently motivated so as to direct their energies and take appropriate steps. Coordination is also crucial; organizational change is not easy and as such the people’s actions must be effectively coordinate to ensure they are consistent with the vision of the new organization. Effective vision statements are imaginable, focused on the future, desirable, communicable and feasible. Whereas crafting an effective vision may be quite challenging and time consuming the outcome is that it clearly gives the organization’s future direction. With a clear direction, every employee will understand, align and support (Acar, 2013).
Communication is a very critical strategy in mergers and change management process. Having a good and clear vision for the new company is not enough. The management teams must extensively to people throughout the new organization on how the new order is expected to improve business performance as well as the benefits that the employees stand. So as to effectively communicate, it is very crucial that the communications are kept simple. The communication should also done through multiple forums, repeatedly and should be two way with employees allowed to express their opinions. Any inconsistencies should be detected in a timely way and clarified sufficiently. The outcome of this that the behaviors of all employees in the newly formed organization will be conditioned and modelled towards organizational strategy and desired organizational culture (Robbins and Judge, 2013). When every person in the organization understands the desired organizational culture and has the necessary information then, their support and commitment towards its realization can be assured.
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Another strategy that the newly formed organization can use is empowering of employees for action. So as to have employees support and act the vision of the merger, the management teams need to identify and eliminate any possible obstacles. The newly merged organization may encounter possible obstacles such as formal structures that may make it difficult for workers to act, lack of necessary skills and competences, personal or informational problems and difficult supervisors who may discourage action. The cultural change involved in merger process presents anxiety among employees and as such for them to act they must be supported sufficiently. Proper trainings to both line managers and their employees, elimination of unnecessarily difficulty formal procedures equipping them with the relevant skills to act can improve the success rate of the new organization.
The management teams should also generate short-term wins. The change process as in the case of a merger takes quite some time to materialize. Employees may be discouraged when they seem not to see outcomes. So as to create a sense of urgency, the managers can use the strategy of creating conditions supporting early successes and visible achievements. Through finding opportunities where early achievements can be scored, recognizing and rewarding the individuals who made it possible for the achievements to be attained the morale of employees can remain high. The goal should therefore for the management teams to ensure that all employees remain motivated, empowered and committed to the new order of things (Richard and Caroll, 2006).
Conflicts may arise as a result of cultural incompatibilities, leadership styles and work processes. The management team can overcome this through constant monitoring of the process so as to detect conflicts in time and address them. Training employees to recognize and overcome can ensure that the merger is successful. It is important for the management to ensure employees in the new organization remain focused on the vision and strategy. This way conflicts will be minimized and the culture of employees aligned to the strategic vision and desired culture of the new organization, bureaucracies that prevent employees from acting and coordinating workers’ action to align with the desired culture. The outcome is a highly motivated, effective and optimistic workforce that will make the transition process smooth.
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- Acar, F. “Analyzing the effects of diversity perceptions and shared leadership on emotional conflict: A dynamic approach”. International Journal of Human Resource Management, 2010.
- Agrawal, V. “Managing the diversified team: Challenges and strategies for improving performance”. Team Performance Management, 2012.
- Harrison, J. Richard, and Glenn, Carroll. “Culture and demography in organizations”. New Jersey: Princeton University press, 2006.
- M. E. Zellmer-Bruhn, M. M. Maloney, A. D. Bhappu, and R. Salvador, “When and How Do Differences Matter? An Exploration of Perceived Similarity in Teams,” Organizational Behavior and Human Decision Processes 107, no. 1 (2008), pp. 41–59.
- P. Robbins and Timothy A. Judge. “Organizational Behavior”. New Jersey: Prentice Hall, 16th ed, 2013