Discuss about the Integration Model Case Study.
Acquisition and Mergers have significant effects on staff especially on behavior, attitude, and values of the target company employees. The uncertainty about the future, learning a new culture and fear of the unknown are some of the factors that cause these effects (Cartwright & Cooper, 2014). Cartwright and Cooper (2014) claims that during the integration process, management ought to exhibit sound management skills to ensure the integration process does not negatively affect the employees of the concerned companies. The failures of business executives to effectively plan the integration process and communicate with the concerned parties are some of the reasons for business integration failure. As such, the management ought to ensure there is proper planning of the process and effectively communicate with all the stakeholders if the process is to be a success. This essay will analyze the impacts of integration model between Big Energy and XYZ Energy on the overall values, attitudes and behavior of XYZ Energy remaining staff and propose strategies to the management of Big Energy to overcome the identified issues.
Pablo (2014) argues that the integration processes between companies can be as a result of merger, acquisitions or takeover. This process to a large extent affect the behavior and attitude and to some extent the values of employees of both companies. However, the employees of the target company are known to be more affected by the integration process mainly because of the uncertainty about the future and fear of the unknown. Lack of effective communication and proper planning of the process are some of the factors that contribute to uncertainty and fear among the employees. In the case of Big Energy and XYZ Energy integration process it is evident that there is a lack of communication between the management of Big Energy and stakeholders especially the staff of XYZ Energy. Also, the integration process seems not to be properly planned as the management of Big Energy tries to rush the process. As such, it would be expected that XYZ Energy staff attitude, values, and behaviors would be affected by the integration process.
The integration process is likely to have the following impacts on the attitudes, values, and behaviors of XYZ Energy staff;
One; loss of self-confidence- Proft (2014) argues that occasionally, employees of the target company experience a loss of personal worth and self-confidence as well as questioning their ability to handle events. The remaining staff of XYZ Energy may start to deal with the loss of self-confidence by pushing themselves very hard with the aim of proving their worth to the Big Energy management to the extent of foregoing sick-leaves and vacations. Other staff may become dysfunctional and act in a skeptical manner or show signs or random and erratic attendance. Also, it is likely that some will attend work only to provide half-hearted commitment and support to the organization.
Two; reduced levels of commitment- the remaining XYZ staff are likely to be experiencing fear of unknown and uncertainty because they are not aware whether they will be retained or not. According to Arvanitis and Stucki (2015) in such a situation, staffs are likely to show reduced levels of commitment to the organization goals and objectives. As such, the remaining staff will be less committed to Big Energy and instead focus their energy on trying to find new opportunities or coping with the confusion created by the integration.
Three; increased tendency to conflicts- the integration of Big Energy and XYZ Energy is likely to lead to culture conflict. Rottig, Reus, and Tarba (2014) argue that the integrating organizations will rarely have a similar culture and thus, culture clash is inevitable in cases of integration. As the remaining staffs of XYZ Energy get to know their colleagues in Big Energy, conflicts will be inevitable due to real or perceived losses. It is so especially because the remaining staffs of XYZ Energy are afraid of losing their jobs and opportunities which they have and are likely to blame their counterparts from Big Energy for the loss.
Four; Reduced morale- according to Shanley (2016) change process is often difficult to any person especially when the individuals concerned are not involved in the decision. The failure to involve employees in the integration process decisions is likely to increase the level of stress among the employees. Usually, stress is as a result of uncertainties about the future as well as fear of the unknown (Shanley, 2016). In this case, it is evident employees of XYZ Energy were not involved in the integration process and therefore, highly likely that the remaining employees are experiencing high levels of stress. The high level of stress experienced by the remaining XYZ employees will reduce their morale to work.
Five; loss of trust- in the argument of Angwin, Mellahi, Gomes, and Peter (2016) the failure to involve the stakeholders during the change process may lead to loss of trust among the stakeholders. The failure of Big Energy management to involve the employees of XYZ in the integration process who are the most affected stakeholders is likely to lead to loss of trust among the remaining staff. Lack of trust on the management negatively impacts on the employee’s performance. The lack of trust in the management of Big Energy will create an unsafe environment for the remaining XYZ employees, and the remaining staffs are likely to spend more time on job hunting and self-preservation rather that performing their job. Also, loss of trust among the management will reduce the level of communication and transparency between the remaining XYZ employees and Big Energy management.
Six; Increased anger and sadness- Shanley (2016) claims that employees of the target company are likely to be overly despondent and withdrawn or aggressive and hostile. These behaviors are caused by inner anger and sadness building up within the employees. According to research, anger caused by the feeling of unfairness can lead to a desire for revenge and painful feelings as well as annoyance, irritation, and resentment (Shanley, 2016). In this case, the remaining employees of XYZ are likely to show a tendency for increased anger and sadness. Especially because of the feeling of unfair treatment after they had devoted much of their energy and time to the success of XYZ as well as conditions over the loss of their colleagues with whom they contributed to the success of XYZ. Increased anger and sadness could trigger voluntary resignation from the company or lead to a desire to take revenge against the company.
Seven; the feeling of worthlessness and being inferior- according to Jemison and Sitkin (2006), the employees of the target company are likely to exhibit the feeling of being inferior and worthless especially because of loss of their position in the company. These feelings could result in self-pity and demoralization. Therefore, the remaining XYZ staffs are likely to exhibit the feeling of self-pity thus negatively affecting their morale and productivity.
In the recent years, a majority of managers regard acquisitions as a means of accessing new market, reducing competition, controlling market share and gaining a competitive advantage (Larsson & Finkelstein, 2009). Larsson and Finkelstein (2009) further argue that business integration is likely to be on the increase as time goes by. However, not all cases of business integration are a success. The failure of business integration is often associated with poor change management skills. Therefore, if business managers want to take the advantage of business integration, they have to manage it right. For example, in the case of Big Energy and XYZ Energy, the integration process was not properly managed thus to a larger extent negatively affecting the attitude, values as well as the behaviors of the remaining XYZ employees.
Adopting the right strategies before, during and after the integration process could have contributed to successful integration between the two companies. Based on the above analysis of the impacts of the integration process on the remaining XYZ employee’s attitudes, values and behaviors, I recommend to management the following strategies to deal with the identified issues;
One; communication- according to Ivancevich, Schweiger, and Power (2007) in any change process communication is critical to the success of the process. Lack of communication is often associated with the failure of the process. In this case, the management of Big Energy should try to share with the remaining staff as much information as possible about what is happening or expected to happen. For example, the management should inform the remaining employees on the possible positions they will occupy once the integration process is complete. Communication will reduce the much-feared uncertainty and reduce the fear of the unknown. Also, it would be essential for the Big Energy management to communicate with the remaining staff about their future in the company and how the changes will impact on the individual employees. Effective communication is one of the ways of ensuring stakeholders participation in the process and can be used to positively influence the remaining employees to remain committed to the goals and objectives of the organization, thus increasing employees’ level of commitment to the organization.
Two; participation by the remaining employees in the process- according to Seo and Hill (2015), people are generally resistant to change irrespective of the effects of the change process. In organizations, employees are likely to resist changes especially when they are not involved in the change process. Involving employees in the change process could significantly reduce expected resistance. Employees’ participation is vital to successful integration of companies because it tends to appreciate the existence and role of the employees in the process as well as boosting their morale. As such, the management of Big Energy should involve the remaining employees in integration decisions especially those that do directly affect them. Allowing participation of the remaining employees in integration decisions will reduce possible resistance that might exist. It could also help cases of is understanding which could lead to increased hostility and conflicts with other employees.
Three; acknowledging their efforts and encouraging them- in the argument of Mendenhall (2005) employees suffering with low self-confidence can be assisted through acknowledging their hard work, their positive efforts and encouraging them to try again when they fail. Therefore, the management of Big Energy should not shy away from acknowledging the positive efforts of the remaining employees of XYZ. Doing so will boost their self-confidence, their morale, and productivity. Also, Big Energy management should encourage the remaining staff especially when they make a mistake or fail instead of reprimanding them. The greatest threat to self-confidence is criticism and managers should avoid criticizing employees dealing with self-confidence issues rather encourage self-criticism.
Four; integrating the two cultures- different organizations have different culture even if these organizations are operating within the same industry. The culture of the organization is informed by shared beliefs, values, activities and attitudes within the organization. As such, it is highly unlikely to find organizations that have similar culture. The management should develop strategies to align the integrating organization cultures to reduce culture conflicts (Marks, Mirvis & Ashkenas, 2014). In this case, Big Energy management should integrate the culture of the two organizations to its corporate culture with the aim of creating an enabling environment for the remaining XYZ employees. Integrating XYZ culture to its corporate culture will create a sense of belonging among the remaining employees hence increasing their morale.
Five; create a personal connection with remaining staff, be honest and truthful- one of the ingredients of successful organization integration during mergers, acquisitions or takeovers is trust. A feeling of mistrust between employees and the management could lead to the failure of the process. Creating a personal relationship with employees could help build trust. The management needs to be honest and truthful with employees about the integration process to curb mistrust (Gomes, Angwin, Weber & Yedidia Tarba, 2013). As such, the management of Big Energy should try to build a personal connection with the remaining staff of XYZ as well as provide honest and truthful information regarding the integration process. Doing so will boost trust between the remaining staff and the management.
Six; create groups and teams- Weber (2010) claims that due to different cultures of the integrating companies, culture clash is unavoidable. Therefore, the management has the responsibility of providing opportunities and environment where employees can work together, share ideas and create new culture like creating work groups, team building events and seminars. Such opportunities can help reduce the feeling of unfairness, being neglected, annoyance and resentment, thus, reducing anger and sadness among the remaining XYZ employees. It could also reduce increased tendency for conflicts with other employees within the organization as well as feelings of revenge.
Seven; Encouraging employees to be innovative- Blake and Mouton (2015) argue that organization productivity and customer satisfaction can be negatively affected by employees’ feeling of worthlessness and inferiority hence the need to address the issue at early stages. According to Kusstatscher and Cooper (2011) the feeling of worthlessness and inferiority among employees can be addressed through creating an environment that nurtures employees’ innovation and allows room for mistake. As such, the management of Big Energy needs to encourage the remaining XYZ employees to be innovative and risk takers. The management should as well provide them with an environment that nurtures their creativity and allows room for mistake.
Organization integration process is highly likely to be faced with challenges especially if there is lack of effective communication and proper planning. Therefore, it is essential to ensure effective communication between all stakeholders and in particular with the employees of the target company whose job security is in question. The management should properly plan the integration process with the aim of reducing cultural conflicts and resistance. However, it is important for the management to appreciate the possibility of issues like employees’ turnover, reduced morale, loss of trust, feeling of worthlessness and loss of self-confidence and develop appropriate strategies to address these issues.
List of References
Angwin, D. N., Mellahi, K., Gomes, E., & Peter, E. (2016). How communication approaches impact mergers and acquisitions outcomes. The International Journal of Human Resource Management, 27(20), 2370-2397.
Arvanitis, S., & Stucki, T. (2015). Do mergers and acquisitions among small and medium-sized enterprises affect the performance of acquiring firms?. International Small Business Journal, 33(7), 752-773.
Blake, R. R., & Mouton, J. S. (2015). How to achieve integration on the human side o the merger. Organizational dynamics, 13(3), 41-56.
Cartwright, S., & Cooper, C. L. (2014). Mergers and acquisitions: The human factor. Butterworth-Heinemann.
Gomes, E., Angwin, D. N., Weber, Y., & Yedidia Tarba, S. (2013). Critical success factors through the mergers and acquisitions process: revealing pre?and post?M&A connections for improved performance. Thunderbird international business review, 55(1), 13-35.
Ivancevich, J. M., Schweiger, D. M., & Power, F. R. (2007). Strategies for Managing Human Resources During Mergers and. People and Strategy, 10(1), 19.
Kusstatscher, V., & Cooper, C. L. (2011). Managing emotions in mergers and acquisitions. Edward Elgar Publishing.
Larsson, R., & Finkelstein, S. (2009). Integrating strategic, organizational, and human resource perspectives on mergers and acquisitions: A case survey of synergy realization. Organization science, 10(1), 1-26.
Marks, M. L., Mirvis, P., & Ashkenas, R. (2014). Making the most of culture clash in M&A. Leader to leader, available at: https://onlinelibrary. wiley. com/doi/10.1002/ltl, 20113.
Mendenhall, M. E. (2009). Mergers and acquisitions: Managing culture and human resources. Stanford University Press.
Pablo, A. L. (2014). Determinants of acquisition integration level: A decision-making perspective. Academy of management Journal, 37(4), 803-836.
Proft, C. (2014). The Speed of Human and Task Integration in Mergers and Acquisitions: Human Integration as Basis for Task Integration. Wiesbaden: Imprint: Springer Gabler.
Rottig, D., Reus, T. H., & Tarba, S. Y. (2014). The impact of culture on mergers and acquisitions: A third of a century of research. In Advances in mergers and acquisitions (pp. 135-172). Emerald Group Publishing Limited.
Seo, M. G., & Hill, N. S. (2015). Understanding the human side of merger and acquisition: An integrative framework. The Journal of Applied Behavioral Science, 41(4), 422-443.
Shanley, M. T. (2016). Consequences of Post-Acquisition Change. The Management of Corporate Acquisitions: International Perspectives, 391.
Weber, Y. (2010). Corporate cultural fit and performance in mergers and acquisitions. Human relations, 49(9), 1181-1202.
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