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Merger between two companies of differing cultures

The structured approach, in which changeover of an individuals, teams and organisation form the present state to the wanted future state, is called change management. In this organisational process, which always aim at the changing powers and make employees to accept and hold the new changes in the business environment. But in the project management, change management downgrade to the project management where the changes are officially presented and approved to the project (Aladwani, 2001). In this research paper, there are two trusts, which work in different cultures, when they are merged to one trust, its getting difficult for them to work together. Integration process is the vital for strategising on how the two companies will combine their operations in order to smooth out the merger process. Once the merger process is carried through, both the organisations face integration issues such as, different working cultures, different environment, and communication etc.

Research question

The methodological point of departure of scholarly research in both the natural sciences and humanities is called a research question. The beginning with the general topic which is narrowed down to a particular question is called the good research question. Then, focuses on the topic of the particular issue. After the preparation of the of the research question, the researcher will state the statement around which the whole research revolves (Southall, 2008)

It is true that the issues will arise the when two organisations merge together. But it is the duty of the HR director to resolve all the related issues, which should be considers are as followed: (King et al., 2004)

The fusion of two different cultures.

Definition of the structure of the organisation.

To consolidate the two companies leaderships.

Significance of the research question

The significance of the research question is that the issues which are arisen in this research paper can help the organisations to deal with the issues easier.

Outline of the research

In this research, the researcher will explain about the paper under the heading of the introduction. The impacts of the merger will be explained properly.

Second part is the literature review, in which the issues arose from the merger will be discussed with the help of theories. The model cultural web is used to get the information about the cultural differences in both the trusts cultures. Maslow’s hierarchy of needs is used to make the employees satisfied. And other models will be explained which are related to the issues.

Third section will be the analysis, in which the relevant model or the frame work will be employed to this case. These frameworks, which are discussed in the above section, will help the researcher to rectify these issues. Some assumptions will be made. Recommendations will be made to the organisation by the researcher.

Last section will be conclusions and recommendations, which will conclude the whole arguments. In this any implications will be explained which can effect the organisation, clients and employees. Recommendations will be made to the organisation, which reflects are the issues resolved.

Literature review

Mergers are around from the last thousands of years: in old times, countries are used get merged with their neighbours just to protect themselves or to defeat some other countries and for as early as the fifteen century, international trading becomes the reason of the merger (Freidheim, 1998).

At the time of industrial revolution, the main method of the combination made the reason for the merger and acquisition, where the main aim is to get the assets like machinery, equipments etc from other in their best way that is to own the assets (Cummings and Worley, 2008). Even today it is happening now even, merger makes the surviving entity to combine the assets and activities and can become the competitor banks merge and move down the scale economic curve. With the merger, the increase scale economics and it can spread the cost of R&D and it can improve the economics of the supply chain, integration of physical assets is the main economic objective of the combination (Freidheim, 1998, p. 29).

The merger of two organisations will take time and efforts both, because of the physical transfer of the equipments and parties to adjust the new working environment. When merger will happen, the lay offs can be done or relocation of the workers can happen, then staff members may be affected. After the lay offs, staff member’s result will be announced. After the lay off, some workers can loose their employment. But those who got relocated from one environment to another will obviously be affected. As an example if the family members relocated from on place to another, then may be the children need to attend new schools and spouses may need to find new jobs for their survival. The maintaining of the productivity and profitability are the main priorities. Most probably, the personal issues and personal factors are often ignored during the merger time wchih can contribute the tense work environment (Walsh, 1989).

There can be lots of issues which can affect the moral and confidence of the employees such as different cultures, different environment and communication. The different cultures can be identified by the cultural web. The moral of the employees can be raised up with the help of the model of maslow’s hierarchy of need. Some other models like equity theory can be used to make the employees work hard get the reward or recognition (Schein, 2009).

Cultural web

Whenever there is an organisational change, there is the main focus on the culture because when two companies combine together, the culture of both the companies clashed. For example when two companies get merged, the culture of the organisation becomes inappropriate for the employees and that holds back the progress of the organisation. In some of the mergers, culture becomes the main reason for the degrading of the companies progress with the reason of the low confidence and absenteeism, which leads to high staff turnover.

Thus, the culture can have the major effect on the organisation working environment and its progress. But there are many solutions available these days to solve these issues. The cultural web is one of the solutions of problems which can be caused by the culture.

The elements of the cultural web

According to Johnson 1988, the following are the elements of the cultural web:

http://www.mindtools.com/media/Diagrams/CulturalWeb.gif

Figure 1

Paradigm: the meaning of the word paradigm is the model or pattern of the environment of any business. In paradigm, the statements of the organisation which can be considered as common and taken for granted.

Stories: the stories which are stated to the new employees or inside the organisation or outside the organisation present its present organisational history, which shows the important events and personalities.

Rituals and routines: the activities which occur occasionally on special occasions are called rituals and normal day to day activities in an organisation are called routines.

Training programs, promotions and annual day party or assessment point which are important to the organisation to reinforce how things are happening around here which is special. Where as routines are the employee’s day to day behaviour and performance to the other employees. This can be the way to do things around, which makes the working environment of the organisation to run smoothly. This becomes the habit of the organisation which can be taken for granted and these are very difficult to change during the change management.

Symbols: the logos, the lavishness of the offices and the formal dress codes of the employees, managers or in simple words, the visual demonstration are the main symbols of the organisation. The nature of the organisation can be judged from the logos, cars, titles or form the communication that is the language they use to communicate with each other and terminology which they use to represent their organisation or the nature of work.

Organisational structure: the structure of the organisation on the charts or which is not on the charts but shows the lines of power and represents the most valued.

Control systems: the method in which the organisation is being controlled. The activities which are most important in the organisation are shown by the reward systems, controlled systems and measurements.

Power structure: power structure shows the real power of the organisation. In this there can be involvement of the senior executives or group of executives or it can be a department too. The main motive of the power structure is that it shows the main persons who influence the decisions, operations or strategies of the organisation.

Maslow’s hierarchy of needs

The hierarchy of needs is being set up by Maslow. It shows the all needs of the human form basic to lavish. As human start from the weak nature and then becomes the fashioned fully. The person can grow straight and beautifully only if the environment is right and makes its potentials activate which are inherited and vice versa (Maslow, 1954).

There are five levels in the hierarchy of the Maslow’s which shows the basic needs of the human. After these basic needs, there is higher level of needs which exists. In these basic needs, there is understanding, aesthetic appreciation and purely spiritual needs. In this hierarchy, the person does not feel to go to other need until the first needs satisfied him and the person does not go to the third one until the second need satisfy him and so on. The elements of the Maslow’s Hierarchy of needs is given below: (Wabha and Bridgewell, 1976)

http://www.union.umd.edu/GH/basic_needs/images/maslows_hierarchy2.jpg

Figure 2

Physiological Needs: the first need is the biological need. In this stage the basic needs like oxygen, food and water shelter and which are related to the constant body temperature are concluded. These needs are the main needs of the human, if these are not being given to the human being, he will run for these for the whole life.

Safety Needs: when the physiological needs are being satisfied then person will run to the second level of the needs, which counts the security. Adults can be secure by themselves because they are aware of the security of themselves except when it is the time of emergency but children needs to be safe and needs to be protected.

Needs of Love, Affection and Belongingness: when the two level of needs are satisfied then the person will think about the need of love, affection and belongingness. People try to overcome the loneliness and the nature of disaffection, with the fulfilment of this stage. That is why this stage involves the give and take of love, affection and sense of belongings.

Needs for Esteem: with the fulfilment of the three needs form the lower stage, the person will jump to the fourth stage which is need of esteem. In this the self esteem and the esteem from the other become prominent. Human want a stable life and self respect and respect form others too. If these needs of the human are satisfied, the self confidence of the human can be very high and can be very valuable to the human. If the human can not be satisfied with these needs then the nature of the human will be frustrated, the confidence will be low and the person will feel helpless and worthless.

Needs for Self-Actualisation: When all first four needs are fulfilled then need to self-actualisation comes in action. Maslow describes this need as a person’s need which the person was "born to do." "A musician must make music, an artist must paint, and a poet must write." These needs makes a person restless. The person feels lacking something, restless and on the edge. If someone is hungry, not accepted, not feel safe or have lack of self-esteem, Its not very difficult to understand why the person is restless. If there is a need ot self-actualisation, it is never clear what a person wants.

Equity theory

Its the human nature to be happy in the relationships where give and take is equal. If one person gets less and the other gets more in a relationship, the person who is getting less will be unhappy and the other person will also fell guilty about the unbalanced. This is non-breakable by well-built social norms about justice (Walster et al., 1978).

According to Adams (1965), in long term relationship any sort of activity or trade is more based on the emotions rather than in short term relations is based upon the trading in of things e.g. giving loan for the purchase of beer etc.

Equity theory is also known as inequality theory as it reflects the unequal distinction of the things that area is attractive to the people. These rewards and personal efforts and related 'give and take' matters at work are 'inputs' and 'outputs'.

The elements of the Equity theory

Carrell and Dittrich (1978) has mentioned following elements of this theory:

The Give and Take Relationship: This relationship is identified by Adams (1965) as input-outcome relationship, in this kind of relationship ratio of the give-and-take is the essential feature of this theory. It focuses on the perception of the give with the expected take.

Reference Points and Comparisons: Its not give-and-take only that activates the equity theory, other factors are also involved those creates a reference between give-and-take these factors are working under the similar conditions.

This is a vast theory and not only applies on the organizational behaviour but also include its application on the relationships in the same way as it applies on management and employee motivation, while in a more slight, intuitive way. Definition of equality theory is based on the interrelation of three foundation stones of input, outcome and equality.

Analysis

After finding the models and theories can resolve the arisen issues and make the merger successful, the researcher will discuss and apply the above model or theory to the issues. This is explained as follows:

The cultural Web: After analysis of the both the trusts culture, the HR needs to compare the cultural web diagrams of both the trusts, which makes them to consider about the following points:

The cultural strengths which are highlighted in the analysis of the current culture.

The reasons which are delaying the strategies and are skewed with one another.

The factors which are disadvantageous to the productivity and the well being of the organisation.

The factors which needs changing.

The new beliefs and behaviours which needs to be promoted.

After finding these above points, prioritise the changes and develop the plan, imply it.

Maslow’s hierarchy of needs: With the help of the hierarchy of needs, the HR needs to know the needs of the employees. According to the individual needs, the person needs to give the motivation. The HR needs to measure the performance of the employees give them the proper motivation according to their needs. So that they can improve their performance.

Reward and recognition: there should be a scheme of reward and recognition which can be the equity theory, which explains the relationship between the supervisors and employees. The supervisor needs to give the reward or recognition for the good performance. In this case, according to the researcher, the employees should get the reward or recognition, if they behave well with the other employees and maintain the good environment in the organisation.

With the implementation of these theories or models, the culture of the organisation is easy to adapt, as the trust A is having decentralised structure and Team B is having centralised structure. As they have different cultures, which make them affected about the protection agreements and about holiday entitlements. With these methods to rectify the issues arisen in the new trust can be rectified and the employees can be motivated, so that they can be adjusted easily in the new environment of the organisation.

Conclusion and Recommendation

In the conclusion, it can be said that the merger of two organisation make rise of the problems to the employees to get settle in another culture or environment. With the implementation of the certain models such as cultural web and Maslow’s hierarchy of needs and equity theory or reward and recognition scheme, make the employees to feel better and adapt the new environment easily. Employees will not feel scared with the equal opportunities to every one. The turn over rate of the employees will not rise because of the changing cultures.

On the basis of the conclusion the recommendation which can be made to the organisation is that in the new organisation, the HR can be one which has different heads to take care of the other departments and then report to the HR head as both the organisation worked in different environments, trust A had different departmental head responsible for the each department but on the other hand trust B had only one HR department which is responsible for everything.

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