This paper focuses on the merger of company A and company B. The middle manager of a health care organization has the responsibility of combining the workforces of both companies, and re-structuring the systems and shape of the new organization. The task of making company C, the two organizations combined, is made more difficult due to the fact of prior competitiveness in the health care realm, with employees viewing company B as non-professional and lacking in quality care. Company B, however, has several inpatient and outpatient services that company A does not, validating the merger.
So, this paper presents the effects of the merger, how employees are coached to work together, the new systems and shape of the organization, and the theoretical framework of the merger. Effect of Sale One of the effects of the merger of company A and company B is the power struggle and fights for control that arises from combining the two organizations. Company A was a smaller agency, with a definite hierarchal operating structure displaying a centralization of power, while company B was of a horizontal nature, scattering power from self-determined employees to upper management.
Increasing the size of the organization is related to an increase in the structuring of the activities but decreased concentration of power. (Borgatti, 2001, para. 6) According to Buono & Bowditch (1989) managers in the uncertain environment of a merger or acquisition carry a huge responsibility. It is the middle managers who address problems and are challenged to guide and motivate the employees in order to avoid complications with the merger, even though they have not been asked during the decision making process, experience a lack of information and might not even support the change. Buono & Bowditch, 1989) “Managerial practices, such as flexibility in personnel assignments, extent of delegation of authority, and emphasis on results rather than procedures, are related to the size of the unit managed” (Borgatti, 2001, para. 7). So, with the consolidation of company A and company B, resulting in company C, managers and department heads are collaborating and re-structuring each working unit of the new organization. Working Together There are influencers and there are resisters to the merger.
Oddly enough, the resisters are from company A, who consider company B to be inferior in organizational practices. One of the key factors to merging personnel is the perception of the new working environment. All employees need to embrace a different perspective of the new organization and working conditions regarding job duties, company culture, and reporting entities. Old habits die hard, so extensive coaching is necessary to bring all employees up to standard for the new organization, company C. A first strategy in merging the two groups of employees from company A and company B is to divide up each group to have members from either company on each team. This facilitates the adoption of company C’s policies and procedures, which are similar to company A’s. So, employees from company A who are familiar with policies and procedures can direct company B employees in the right direction. Ongoing group sessions and seminars are held to help employees through the transition process of the merger.
Different people adapt at different rates, therefore the need for training and coaching to the expectations of company C is to be in place until all employees take a mandatory final test to determine the absorption of the new company’s policies and procedures. Empowerment of company A’s employees to teach and delegate tasks to company B’s employees may help to restrain the competitiveness of the two groups. Having weekly roundtable discussions with members of both groups to assist with the merger will give everyone the chance to air their concerns and complaints. Middle managers need to support the employees in their handling of uncertainty, provide information and struggle with changing the behaviors of the employees. A middle manager also experiences some individual complications, such as loss of network and reductions in responsibilities” (Ofverstrom, 2006, para. 5). So, as middle manager, the necessity to successfully combine the groups from company A and company B on the policies, procedures, and mission and values of the new company C is a difficult process at best. But with determination and fortitude, this task can be accomplished.
Systems and Shape of the Organization Although there is a high degree of attention on the financial calculations in these strategic decisions, Cartwright & Cooper (1992) show that 50 percent of all acquisitions fail financially. The reason for this is usually that the human factor plays a larger role than what is recognized during the decision process. According to Buono & Bowditch (1989) most of the problems that affect the result occur internally by the dynamics in the new organization. The human factor is therefore an element that should not be ignored during those strategic changes.
A merger is not something that happens to an organization, it happens to the people within the organization. The shape of the new organization, company C, is a flat organization with a wide span of control. This type of organization enables employees to report directly to one supervisor, yet have the opportunity to engage in dialogue with upper management. The merger allows for close proximity of all personnel, thereby increasing the circumstances of employees airing concerns and complaints to a higher management other than the immediate supervisor. Theoretical Framework When cultural change occurs, employees become aware that the measuring tools for performance and loyalty have changed suddenly. This threat to old corporate values and organizational lifestyles leaves staff in a state of defensiveness accentuated by low levels of trust within the institution and cultural shock” (Kavanagh, M. &. Ashkanasy, N. M. , 2004, para. 12). Given this knowledge, the empirical evidence of company A influences company B to the point of leadership. So, the middle manager achieves full cooperation from the newly acquired company by an open door policy and transparency.
A good theoretical framework for company C is the conceptual idea of excellent patient care while maintaining company values and mission. “The sets of entities in an organization’s environment that play a role in the organization’s health and performance, or which are affected by the organization, are called stakeholders. Stakeholders have interests in what the organization does, and may or may not have the power to influence the organization to protect their interests” (Borgatti, 2006, para. 20).
Multi-stakeholder processes and social learning are about setting up and facilitating long term processes that bring different groups into constructive engagement, dialogue and decision making, so both company A and company B need to be involved in continuous inter-activity to develop strong working relationships and outstanding patient care. Conclusion The objectives of strategic changes such as mergers and acquisitions are to achieve corporate growth, economies of scale, vertical integration, diversification, and even provision of capital for future leveraged buyouts. Buono & Bowditch, 1989) The merger between company A and company B is successful due to the middle manager’s diligence, patience, and understanding of organizational culture and dynamics. This paper has shown the strategies and means of integration of two companies who were in prior competition, with the final outcome being positive for employees and management alike.
Borgatti, S. P. (2006). Organizational Theory: Determinants of Structure. Retrieved from http://www. analytictech. com/mb021/orgtheory. htm Buono, A. & Bowditch, J. (1989). The Human Side of Mergers and Acquisitions, Jossey- Bass Inc. Publishers, San Francisco Cartwright, S. & Cooper, C. (1992). Mergers and Acquisitions: The Human Factor, Butterworth-Heinemann Ltd, Oxford. Kavanagh, M. &. Ashkanasy, N. M. (2004). Management Approaches to Merger Evoked Cultural change and Acculturation. Retrieved from http://karhen. home. xs4all. nl/Papers/3/MANAGEMENT%20APPROACHES%20TO%20MERGER%20EVOKED%20CULTURAL%20CHANGE%20AND%20ACCULTURATION%20OUTCOMES. pdf Ofverstrom, A. (2006). A Middle Manager’s Dilemma in Mergers. Retrieved from http://arc. hhs. se/download. aspx? MediumId=216