Change and Culture

Introduction

Mergers or acquisitions have become quite popular nowadays. They occur when two or more organizations unite under one umbrella group. The merger is effected through combination of assets and liabilities of these organizations. Mergers are of different types as Gingerich, B. S et al (1996 p 37) explains. For example, the horizontal merger takes place where two or more organizations that were previously competing with each other combine to become one. Other types of mergers are the vertical and conglomerate mergers. For the purpose of this paper, I shall focus on the horizontal merger.

This paper describes a merger between two healthcare companies that are competitors in their field. In this case, the employees of host organization hold a view of the other organization as an enemy. In addition, they feel that the other organization has been providing poor services. Their view is seen to have an adverse effect on their motivation to work and eventually on the new corporation’s performance. Though the new corporation provides inpatient and outpatient services which the host organization doesn’t have, the adverse effects of the merger may override the positive effects. In view of these points, this paper will examine the impact of the new organizational culture formed by the merger on economic performance of the new corporation. Secondly, it will describe some of the mechanisms that a manager of the new corporation can use to harmonize the relationship workers of the two organizations. Finally, the paper will give a look at the systems and the shape of the new formed organization.

The impact of merger on sales

An organizational culture has an indirect impact on the sales proceeds of that organization. As Ashkanasy, M. et al (2010, p 129) explains, the level of sales of any organization is dependent upon the performance of the employees of that organization. In turn, the level of performance of the employees in an organization is usually dependent on their cultural orientation, beliefs and attitudes in that organization. According to Ashkanasy, M. et al (2010, p 129), negative beliefs and attitudes of employees towards the structure or operations of the organization have direct negative impact on their motivation to work. Ashkanasy, M. et al (2010, p 129) explains further that a change in culture of an organization can lead to improved economic performance of an organization. At the same time, a change in culture of the organization caused by for example, merger can lead adverse effects to economic performance as explained earlier. This will be more pronounced if the change has a direct negative impact to the employees’ attitudes and beliefs.

In this particular scenario, merging of the two organizations is a change that will have two significant effects. First, it will be advantageous to the host corporation since the former competitor has extra services that the host organization doesn’t have i.e. the inpatient and outpatient services. Combining will imply that more capacities for sales of their services. The second effect is the change in the culture of the organization which rather, will have an adverse effect to the new corporation’s performance. As mentioned earlier, the employees of host organization have always viewed the competitor as enemy who provided poor services. This explains that the two corporations constitute two contrasting cultures. Most likely than not, the employees of the host corporation are going to maintain the negative attitude even after merging. Obviously, this will not be comfortable to work together with the workers from the new corporation or even under its management. In short, the employees and most likely from both corporation will not be willing to support a new culture. Instead, they are likely to resist. This will eventually translate into lack of motivation by the employees to the quality of health services they will provide. Poor services will automatically lead to lower sales by the new corporation.

A good example of the impact of culture on organizational performance is the findings of a research carried out by Avey, Wernsing and lutherns (2008) (As cited in Ashkanasy, M., et al 2010, and p 129). They investigated the impact of organizational change to the performance of the employees. From their research findings they highlighted how organizational changes tend to be dominated by various obstacles including employees’ resistance to change. They argued that employees’ bad attitude and negative emotions has a definite negative effect on the working climate of an organization. From their research findings, employees with negative attitude to the change of culture of their organizations were likely to view the change as unfavorable and to have negative reactions to it. They explained that a change in the culture of an organization needs to consider the employees’ psychological beliefs, their level of optimism and resilience among others.

Ways of dealing with cultural difference

There are various options that the healthcare manager can use to harmonize the employees of the new corporation and ensure that quality care is provided. Woodside, A. G. explains that, it is quite important for a manager to take a discursive approach with the employees. According to him, this step will help to enhance a shared and unbreakable pattern of knowledge and perception of the new culture as reality. He explained that, this approach will also help to transform the negative believes held by the employees towards positive. In addition, it will help to uphold organizational culture as shared knowledge and interaction among the employees. In this particular case, the middle manager can form a discussion with all the employees from both organizations and sensitize them about the importance of accepting the new organization and its employees. This is an interactive approach where all the employees are requested to participate in enhancing a successful transformation of culture. That way, the employees from both sides will feel obligated to support the new culture and accept the new employees.

A study was carried out on 8,054 employees form different organizations in Sweden on their possible reactions after a change in culture of their organizations’ culture, (Contrada, R. J & Baum, A, p. 155). The findings of this study illustrated that organizations that involved their employees in the change process had achieved much success in enhancing the new culture. One of the mechanisms the organizations used was discursive approach with the employees to encourage them accept the new culture. The findings indicated that, in most of the organizations that didn’t take that approach, their employees were more depressed than those that employed the approach. In addition, where the culture change was as a result of merger, many of the employees who were actively in the change could not accept the new employees. For the organizations that employed this approach, the reverse was true. Therefore, this explains the importance of taking a discursive approach by the manager to harmonize then employees and prevent the repercussions of a competitive stance.

Structure of the new organization

After the merger, the new organization’s shape and size will be centralized to enable it to operate as a single entity. As weber (as cited by Sisaye, S., 2006) describes, an organization has many different structure both formal and informal. Examples of the formal structures include; accounting control systems, management control systems, marketing systems and others. As well the informal systems of an organization are such as norms and culture as well as leadership behaviors and attributes. As organizations merge, all these structures increase in size becoming more complex.

In this scenario, they will result in more management hierarchy, to handle the greater the increased activities of the new organization. In addition, bureaucratization of rules within the new organization will increase resulting in increased barriers for organizational learning. According to weber (as cited by Sisaye, S., 2006), a new organization such as the one in this case will have an extensive market coverage than before merger. This will be enhanced by the increased branches with the new organization. The resources and physical facilities of the organization are going to increase. In addition the new organization will be guided by a new system of culture that didn’t exist in both of the former organizations. It will be guided by new set of values and norms and at a higher level than before. Finally, the new organization will have a new communication paradigm.

Conclusion

Though the objective of merger of organizations is to provide positive effects, it should not be ignored that it has negative impacts too. As noted in this section, other than economic effects, mergers can have a serious adverse effect on the cultural beliefs of the employees of an organization. Culture clash as a result of merger usually has a direct effect on job performance of an employee. This will usually demoralize the employees, and the implications will be provision of unsatisfactory performances. This will obviously result in lower output and lower total sales of the organization in the long-run. Therefore, it is important to keep consideration of the possible impacts of a merger before it is affected.

Remarkably, it is important for a manager to be prepared with all mechanisms available to deal with any obstacles that may arise before a merger takes place. As discussed earlier, a merger is likely to face resistance from employees. Therefore, all available mechanisms to help the employees cope with the new formed culture ought to be kept ready. It is also very important to sensitize the workers of the approaching change before it happens. This will help to prepare them for the coming change psychologically. Thus, the success of organizational cultural change after merger depends on the level of commitment of the management in managing the change. Finally, it is important to take note that when a merger takes place, a change in the shape and systems of the organizations involved takes place. Both the formal and informal structures of the former organizations increase in size and complexity.

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