The merger is the combination of two or more business organizations to create a new entity. The acquisition is the process whereby a company buys another without forming a new business. The current culture of the organization changes when a merger or acquisition takes place. During the process, changes are effected in all departments of the organization. The two companies involved have different organizational cultures that must integrate. To achieve an effective merger and acquisition (M&A), the companies must use appropriate tools to make the firm accept the changes. Leadership plays a significant to ensure the successful integration of cultures during the change process. An effective leader exhibits traits and personality that will integrate the processes and systems of the firms.
Recommended Tools for Culture Change
Change management involves the processes of making the organization accept changes in its culture. The culture of a business refers to the practices that facilitate its smooth operations. Activities a company has adopted for a long time become part of its existence. Therefore, making those changes within a short period may be challenging. To realize the changes, the organization should adopt the necessary strategic tools (Naz & Sim 2015). Facilitating change of culture requires an effective leadership strategy. In this study, systematic tools are recommended to facilitate the management of cultural change processes.
Qualitative Measurement of Current Cultural Values
Before initiating the changes, a firm should understand its current culture and values. Employees are the most significant resource in a business because they influence other factors of production directly. The firm must understand the current values and beliefs of its employees. Creating changes in an organization have a direct effect on the worker’s perceptions and attitudes. Therefore, understanding their current values will be the initial step to make the firm accept change. Assessment of current values allows the company to adopt good ideas and enhance accountability among the stakeholders (Naz & Sim 2015). It gives the ability to make precise cultural changes over a period. Quantitative evaluation of the current culture helps in developing the action plan.
Intentional Alignment of Culture, Structure, and Strategy
The change in the organizational culture should conform to the business strategy of the firm. It must also fit with the formal systems and policies that shape the organizational structure. The elements of the structure to consider include recruitment processes, departmental structures, job descriptions, employment policies, production, management, and logistics. The firm must restructure these features to support the changes. In this context, innovation and creativity play the key to the success of initiating the change. During the process, the change management team can assess and make appropriate alterations that will support the new system (Hornstein 2015).
Participation of the Staff and Stakeholders
It is impossible to realize change without involving the staff and other stakeholders. As stated earlier, human resources influence the success of the business through experience, knowledge, and profession. When these people participate in the change process, they will provide varied ideas and solutions to problems encountered. They should take part in the meeting aimed at designing and developing new structures and cultures.
People feel motivated when they get a chance to participate in such an important event. They will give their best to ensure that the entire process is successful. The top management team should keep in mind that a strong integration could be realized by accepting a varied range of ideas (Seo et al. 2014). Participation creates motivation and excitement among employees and stakeholders to accept change. However, it is important to establish an independent entity that oversees the change. The approach ensures timely decision-making, prevention of ambiguity, and delay of the main actions.
Communication and Demonstration of Change
Effective communication can help in making the organization accept change. It should follow both upward and downward channels. The management should inform their juniors about the M&A of the firm. They should apply actions conveying the desired vision for the company’s future. The message should be repeated many times as a way of putting the emphasis. A good leader should not underestimate the power of repeated communication.
It enhances clarity and makes the message to sink in the recipient’s mind. On the other hand, they should contact employees to give their opinions about the intended changes. The views of employees will help the management to paint a picture of the change outcome. Actions of the leaders have a direct influence on the attitudes of staff and stakeholders towards the change (Zhang et al. 2014). Therefore, they must demonstrate their commitment to the firm’s prospects. In addition, leaders should provide stakeholders with reliable information about the resultant look of the merger and acquisition. They must demonstrate dedication to change so that others can follow them.
Emotional Response Management
Not everyone within the organization will accept the changes depending on the effects that might occur. The M&A can make some employees lose their jobs. Others can get a demotion while other employees can gain. Some investors might also lose during the process. When changes affect the self-interests of employees and stakeholders, internal conflict can occur during the early stages. The emotional responses of employees have a significant influence on the approach taken to implement the changes.
The analytical approach is necessary for the management of employees’ emotional reactions. Leaders should pay attention to the feelings of their employees and engage them accordingly. The step will help in managing anxiety and negative attitudes during the process of change (Zhang et al. 2014).
Getting the right people to initiate change can help in managing conflict of interests. Respected people in the organization have the ability to influence factors that drive change. In addition, people will agree with their ideas. People elected to initiate the processes most demonstrate enthusiasm and commitment to achieve the objectives. Working as a team helps in modeling the trust needed to move forward. Creating a diverse team with highly skilled individuals who understand the organizational needs accelerates the process (Seo et al. 2014).
Creating Short-Term Wins
As the firm prepares to merge or acquire another, many activities are undertaken. Some of the activities may not be visible to everybody. To show that the process has taken the right course, the organization must achieve short-term gains. The outcome wins the faith of employees and other stakeholders in the efforts of management to realize change. It will motivate workers and help in building momentum for achieving their goals.
The best way to inspire people is by developing short-term wins and providing honest feedback. The management should identify goals they can achieve in a short period. The achievable wins must be visible many people within the shortest time possible. To succeed, the leadership should focus on a few goals instead of adding new once (Alaranta 2006). It compels people to fulfill the company’s new vision, as they build momentum for the merger or acquisition.
Putting Unrelenting Effort
When a decision has been made to change the organizational culture, going back may cause more damaging effects than moving forward. The management should not give up on the way. After gaining excitement and momentum to accept change, leaders should continue to make their new vision a reality. To achieve that, they must show a sense of urgency and eliminate unnecessary hurdles. They must adopt aggressiveness to work on the weaknesses and keep the process relevant. It is important to try new opportunities that would initiate. Replacing time-consuming activities with straightforward tasks is a major milestone towards achieving culture change (Lungeanu et al. 2015). In this context, people must maintain the vigor and motivation to push for the change until it is realized.
Sticking to the Change
Maintaining the ideas of changes and establishing new structures are the ways to succeed. Leaders need to create a new organizational culture with supportive elements. It is the right way or providing new operational procedures. The company should communicate new stories to its audience. It needs to explain the new activities and expected success. They must maintain the stability of behaviors and helpful outcomes for the posterity of the new culture (Alaranta 2006). When introducing new employees to the firm, it is important to give them positive messages about the outcome.
Leadership Traits for Effective Change
The culture change in an organization requires appropriate leadership skills. It is because the process is not random, but a procedural development that determines the company’s fate. The leadership of a business organization influences its direction and fate after the change. Poor leadership may bring the firm to a standstill and possible financial crisis if the. It is because of the poor approach and ineffective decisions they make when the company enters into a merger.
Traits of a leader must reflect the organizational values. Every leader faces challenges when trying to introduce new systems. In certain situations, people resist changing because the situation serves their interests (Lungeanu et al. 2015). A good leader helps in making the culture change possible even in a diverse context. A leader who demonstrates good traits can facilitate a smooth transition during the merger or acquisition.
A leader must be persuasive to influence change activities. The trait gives a person the ability to convince others that the intention to merge or acquire another business is good. The ability to persuade others to accept new ideas involves effective communication skills. The leader must have knowledge and experience to know people’s needs and expectations. In this context, the people get the information in the right format. The persuasive nature of the message makes them accept the changes. A charismatic leader can easily make employees accept change (Seo et al. 2014). Communication skills used help in changing people’s mindset. It is the crucial point of initiating new ideas.
The leader must be thorough when organizing workers to start the change processes. A company can benefit from a merger or acquisition is the leader explores all possible outcomes. It is important to note that a new culture has both positive and negative results. It is not a good idea to focus only on positive results (Alaranta 2006). The company must think of the possible failures, which might come with the change.
A good leader should take to study the worst and the best possible situations. Failure to take into consideration the possible results can make the organization face unexpected problems. In this context, the leader must be thorough when exploring the scenario. Exploring all possible angles of the results allows the leader to provide the test result (Kavanagh & Ashkanasy 2006). Consequently, the company will be able to establish effective guidelines to be followed during the implementation.
There are many complex issues attached to change. Investors can question the credibility of the management’s decision to merge or acquire another firm. On the other hand, employees may doubt whether the intended changes will favor their interests. The conflicting ideas may put the company’s fate in the line. These issues are not easy to deal with because of their complexity. A confident leader has the ability to soothe those problems throughout the entire process. A leader who believes in the new culture will always give positive information to employees and other stakeholders (Alaranta 2006). Messages relayed in a confident manner improve morale and motivation required to move forward. Everyone will feel confident and participate in the activities assigned to them.
People behave normally when engaging in daily routines. However, they get concerned when changes occur. They will seek answers to many questions. Rumors will go around and create confusion throughout the firm. When distorted information is not controlled, the situation might worsen. A leader who sits back while employees receive the wrong message of the organizational change cannot realize success. Prior communication will stop rumors and unconfirmed information from spreading among the workers. Change causes confusion, and an effective communication strategy is the only way to create order (Kavanagh & Ashkanasy 2006). Relaying information in the right way helps in giving direction.
Apart from confidence, a good leader must demonstrate firmness when providing direction for culture change. Steadfastness helps in moving positive agendas forward. A leader who has confidence in the changes will ensure all activities are executed effectively. Unwavering traits help in building employees’ momentum and desire to realize the new vision. Leaders must stick to the initial strategy and make necessary changes that would allow for the quick realization of the process (Alaranta 2006).
In the current business context, companies merge to increase their abilities and resources. A company may also acquire another firm to expand its presence in the industry. A merger or acquisition has long-term effects on the organization. Even though it is a good idea, the processes involved are diverse. In addition, they include challenges that can give negative outcomes. The management must develop an appropriate model to realize positive results. A model used should influence people positively, so that they can accept the new culture. People’s reaction to change is important because they influence other factors of operation in a firm.
While employees use resources in the organization to provide products and services, investors provide the resources. Therefore, their attitude must conform to the desired goals if the firm wants to benefit. Leadership plays a major in shaping the activities of the organization. A leader must demonstrate the ability to influence employees and stakeholders to accept the new culture. A good leader must convince people and make them believe in the change processes.
List of References
Alaranta, M 2006, ‘Managing the change process of the post-merger enterprise systems integration: A case study’, International Journal of Information Systems and Change Management, vol. 1, no. 1, pp. 62.
Hornstein, A 2015, ‘The integration of project management and organizational change management is now a necessity’, International Journal of Project Management, vol. 33, no. 2, pp. 291-298.
Kavanagh, H & Ashkanasy, M 2006, ‘The Impact of Leadership and Change Management Strategy on Organizational Culture and Individual Acceptance of Change during a Merger’, British Journal of Management, vol. 17, no. 1.
Lungeanu, R, Stern, I & Zajac, J 2015, ‘When do firms change technology-sourcing vehicles? The role of poor innovative performance and financial slack’, Strategic Management Journal.
Naz, Z & Nasim, S 2015, ‘Emotional balancing and change outcomes during post-merger integration: a case study’, Flexible Systems Management Managing Flexibility, pp. 297-310.
Seo, J, Gamache, L., Devers, E & Carpenter, A 2014, ‘The role of CEO relative standing in acquisition behavior and CEO pay’, Strategic Management Journal, vol. 36, no. 12, pp. 1877-1894.
Zhang, J, Ahammad, F, Tarba, S, Cooper, L, Glaister, W & Wang, J 2014, ‘The effect of leadership style on talent retention during Merger and Acquisition integration: evidence from China’, The International Journal of Human Resource Management, vol. 26, no. 7, pp. 1021-1050.