Changes That Occur As a Result of a Merger Term Paper
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Human beings are by nature change-resistant and particularly within an organizational context there is anxiety about change, given fears of job losses or simply being unable to adapt. It is essential to convince change agents of the need and urgency for change and also of the congruency of the change with the evolving vision for the company.
A "vision statement should have four elements: a customer orientation, employee focus, organizational competencies, and standards of excellence" ("Changing the game," 2015:3). The change should be demonstrated to enhance all of the organization's capacities, not simply improve its bottom line in the short-term. Having an effective vision statement is necessary for effective change. The Lewin Model of organizational change stresses the need for a three-part adaptation process called unfreezing, changing, and refreezing. In other words, the organization must be temporarily destabilized or unfrozen before it returns to a new equilibrium. "This first part of the change process is usually the most difficult and stressful. When you start cutting down the 'way things are done,' you put everyone and everything off balance. You may evoke strong reactions in people, and that's exactly what needs to done" (Thompson 2015).
Organizational members may go through a stage of denial or resistance that can be very difficult to overcome, particularly if the attempted change is more proactive and anticipatory in nature rather than driven by immediate, external events. A crucial part of selling the change requires "sharing competitive information, creating behavioral dissatisfaction, using models to produce dissatisfaction, and mandating dissatisfaction" ("Changing the game," 2015:5). Organizational transparency regarding the reasons for the change and the consequences of the change (even the anticipated potential negative consequences) is required. The outside environment is always changing and a good business is always engaging in environmental scanning to inform its strategic planning. Certain aspects of the company may need to be adapted to current circumstances, although the core vision of the organization should remain constant.
There is no singular 'one-size-fits-all' approach to change management, however, and a variety of models may be deployed over the course of the organization's history. According to the textbook, there are two essentially different navigational approaches to change, an analogy often made between organizations and sailing ships: "the European navigator begins with a plan -- a course -- which he has charted according to certain universal principles, and he carries out his voyage be relating he every move to that plan" and if there is a need for change, the plan must be changed ("Changing the game," 2015:7). In contrast, the Trukese navigator focuses on the final objective and changes his course depending upon the moment-by-moment observations of the environment, "this effort is directed to doing whatever is necessary to reach the objective" ("Changing the game," 2015:7). Both approaches may be useful, given that organizations today require strategic change plans to be functional but must also be responsive to unexpected changes.
Anticipated changes are planned ahead of time and occur as intended. Emergent changes arise spontaneously from local innovation and that are not originally anticipated or intended. Opportunity-based changes are not anticipated ahead of time but are introduced purposefully and intentionally during the change process in response to an unexpected opportunity, me vent, or breakdown" ("Changing the game," 2015:7). Unfortunately, although there is a greater need for change in organizations than ever before, human beings are not more responsive to change than they have been in the past, since human nature is unchanged. This is often called the resiliency gap: there is greater need for resilient mindsets but that need is not being satisfied. "Even perennially successful companies are finding it more difficult to deliver consistently superior returns" ("Changing the game," 2015:10).
Changing the game. (2015). [PowerPoint]
Thompson, R. (2015). Lewin's change management model. MindTools. Retrieved from:
Yinscape and Yangsearch: Case study
The first meeting of the top Yinscape managers must have a clear agenda regarding the need to deal with the potential obstacles the likely merger between Yinscape and Yangsearch may present. The two companies have extremely different corporate cultures. Yinscape is based in Mumbai, India and has a strong, centralized authority in terms of its leadership structure. In contrast, Yangsearch, which his based in the United States, has a more typically decentralized approach to leadership that is characteristic of high-tech Silicon Valley firms like Google. How to merge these corporate cultures and
generate synergies is not immediately apparent.
Anticipated questions and concerns
The first and most obvious concern is if the merger will be a success given the contrasting corporate cultures. Yinscape has been able to develop a loyal following of a relatively small customer base while Yangsearch, although cash-poor, has many customers thanks to its culture of innovation. Ideally, merging the quality of service of Yinscape with the creativity of Yangsearch would make a much better and more resilient organization. But the attitudes of workers to such a proposed change would likely initially be very different.
More than 2/3rds of all mergers fail. "Those who advocate mergers will argue that the merger will cut costs or boost revenues by more than enough to justify the price premium. It can sound so simple: just combine computer systems, merge a few departments, use sheer size to force down the price of supplies and the merged giant should be more profitable than its parts. In theory, 1+1 = 3 sounds great, but in practice, things can go awry" (McClure 2015). First, it must be decided how the company will reorganize. It will be problematic for Yinscape to adapt to the lack of hierarchy and fluid direction characteristic of Yangsearch. Also, Yinscape's customers may feel threatened by the expanded client list and the lack of personal attention they receive in comparison to before the merger. Another risk of a merger is that the organizations will lose business as well as loose what made them so successful initially. Yangsearch is likely concerned that its freewheeling structure and the non-directive nature of its management will not be tolerated by the current managers of Yangsearch. Corporate mergers that have been successful have tended to be large, well-functioning companies that were able to play to their strengths, such as the merger of Exxon and Mobile and Disney and Pixar (DiMaggio 2009). Corporate culture clashes, in contrast, have been blamed for some of the most spectacular failed mergers, including Daimler Benz/Chrysler and Mattel and The Learning Company (DiMaggio 2009). Yangsearch and Yinscape are currently second-tier entities and are still working out their problems.
Another potential problem which may arise is that of the capital financing of Yinscape. At present, Yinscape's capital financing is strong because its conservative policies and the reputation of its cautious leadership have quieted fears that investors might have about a new organization. In contrast, Yangsearch's capital is poor and its profile is risky because of its entrepreneurial focus. This could cause investors to pull out of the merged organization.
Results of the meeting
During the meeting, an initial change management plan must be put into place to orient workers from both firms about the expectations of the newly merged entity. An initial plan to prepare employees for the change and convince them of the need for urgent change must be put into place. The new organization must be truly a mesh of both sides, managers cannot expect to simply spackle the two together. There must be a blending of all relevant departments. This will require a restructuring of both companies, such Yinscape will likely have to become less centralized, to allow creative personnel much greater leeway to pursue pet projects. In contrast, Yangsearch employees may be forced to be more accountable than they are accustomed to be in the past. This could generate some corporate friction. Still, there must be policies put into place even if creative talent is allowed greater leeway than in the past to ensure that scarce resources are channeled into results which are mutually advantageous to all and are not simply innovation for the sake of innovation.
Investors must also be presented with a plan for how the company will be restructured so they do not withdraw out of fear that the new company will be less tightly-governed. There must be a sound plan for risk management. A press release for investors, combined with a tentative plan for how the new company will be governed in terms of its leadership and divisions should be included in this release.
First steps after the meeting
After the meeting, it is essential to evaluate the concrete expected results of the merger and to create a coherent plan to ensure that a new entity is feasible, given the current disparities that exist between the two structures. A timetable for the merger must be created along with a plan for staff retraining. Likely staff fears must be dealt with and addressed, such as the fact that Yangsearch employees may worry about losing some of the freedoms they currently…
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