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Post-Merger Integration and Change Management Report for Paper Converters Limited.
Executive summary
Dyson Paper Ltd and Jones Sales Agents Ltd were merged and formed Paper Converters Ltd this case study is an analysis based on the post-merger integration and change management of Paper Converters Ltd. Dyson and Jones had been great friends since childhood although their respective companies were located 60 miles apart at the time of the merger. This study is based on the case study of paper converters which has focused to expand the business through the integration but it has failed to meet expectation and facing big problems. Post-merger integration is the critical period of every strategic merger and actually determines the final conclusion of the entire merger. Researchers have found out in determines the final conclusion of the entire merger. The researcher has studied many scholars literature where he found many companies have faced the big problems in post merger integration because of change management environment and cultural clashes. The researcher also found some interesting problems of Paper Converters Ltd which it was facing the same problem like Paper Converters Ltd. After post merger integration the biggest challenges of paper converters ltd was re-aligning departments and teams to adapt to the new organizational structure, managing the cultures. Corporate cultures to become more powerful drivers of high performance. The collective thoughts, habits, attitudes, feelings, and patterns of behaviour and the pattern of arrangement, material or behaviour which has been adopted by a corporation, group, or team as the accepted way of solving problems. The subculture (different department culture) is an issue which is the real problem of the organization. The company should develop a new corporate culture in post merger integration because people were working two or more different cultures and involved different work practices. The notion of cultural islands is very interesting terms and the researcher believed that It might be solved the cultural problems in any organization. Talent management is focused to respect employees, clarify objectives of the company to the employees, Increase awareness about the situation to employees, and create dialogue and effective communication between managers and employees and strong trust relationship between managers and employees. It creates strong self motivation of employees it should be the biggest achievement of company to mitigate the problems.
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Post-Merger Integration and Change Management Report for Paper Converters Limited.
Table of Contents
Executive summary ........................................................................................2 Table of Contents...................................................................................................3 Section 1: Introduction....................................................................................4 Section 1.1 Aim of Study ................................................................................5 Section 2. Organisational Change and Management in PMI ...........................5 Section 2.1 Problems of Change Management in PMI......................................7 Section3. Creating A New Corporate Culture in PMI........................................7 Section 4. Creating Effective High Performance Teams in PMI........................9 Section 5. Effective Talent Management in PMI............................................10 Section 6. Recommendations .......................................................................12 Section 7. Conclusion ...................................................................................13 Section 8 References.....................................................................................14 Appendix 1.................................................................................................... 16
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Post-Merger Integration and Change Management Report for Paper Converters Limited.
Section 1: Introduction
This is a case study analysis of Paper Converters Ltd which was formed in 1988 following the merger between Dyson Paper Ltd and Jones Sales Agents Ltd. This case study is an analysis based on the post-merger integration and change management. The major obstacle to successful merger integration is conflicting corporate cultures. The main cause of failure of Paper Converters Ltd, failure to meet post-merger and expansion expectations is a clash of cultures, both organizational cultures and international cultures. The list of possible factors influencing M&As seem to be endless, including such factors as unrealistic expectations, poor planning, talent lost or mismanaged, poor communication, cultural clash, changing external environmental conditions, integration difficulties etc. (Schuler and Jackson, 2001; Brouthers, Van Hastenburg and Van Den, 1998; Pablo, Sitkin and Jemison, 1996; Bryson, 2003; Kerr, 1995; Burns and Rosen, 1997; Cartwright and Cooper, 1995; Risberg, 1997; Chatterjee, Lubatkin, Schweiger and Weber, 1992; Griffith, 2000). Merger integration communication should provide employees with a thorough understanding of what they can expect from the pre- and post-merger workplace and how they can make a positive contribution (Gerds and Strottmann, 2010). In this case study, Barry believes that success is achieved when each individual is prepared to accept responsibility not only for their own work, but also for the outputs of the team as a whole. On the other hand, Alan inspires a culture in which every employee knows what their job is, and that each individuals job forms part of the greater whole. On the above statement Barrys employees worked different organization cultural environment than the Alans employees. Due to the two different organizational cultural environments affects the Paper Converters Ltd in change management and has faced the problems in external and internal environment of the organization. When cultures merge, the problems encountered are as instant as whiplash (Fisher, 1999). The Paper Converters Ltd was working together with a Zambian Company as a joint venture, the company did not run smoothly. Eventually, the company failed to meet expectations because of the management changing environment and it should be cultural conflict, lack of
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knowledge of new systems, different cultural practices, and different worked practices existing in both countries.
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Post-Merger Integration and Change Management Report for Paper Converters Limited.
Source: Lewin Change Management Model This figure explains that the Lewin three stages of change management, According to Lewin (1940s) cited in www.mindtools.com, unfreeze stage very difficult to move another stage so need to develop the motivation in all. He further added after the uncertainty created in the unfreeze stage; the change stage is where people begin to resolve their uncertainty and look for new ways to do things. On change stage people start to believe and act in ways that support the new direction. Promoting effective communications and empowering people to embrace new ways of working and people need to understand how the changes will benefit them so that they need time to understand the changes and they also need to feel highly connected to the organization throughout the transition period. The process ends when you return the organization to a sense of stability (refreeze), which is so necessary for creating the confidence from which to embark on the next, inevitable change and with a new sense of stability, employees feel confident and comfortable with the new ways of working. Researcher has found in the Paper Converters Limited, it needed the addition of new machinery and the acquisition of premises adjacent to the original unit because the production capacity of the manufacturing unit was being stretched to its limits. Sales forecasts indicated that company would continue to increase their market share but the production capacity was quickly becoming a limiting factor in terms of further growth. So, the directors decided to change the location for further growth because it is necessary to change the company for further growth. This statement described that the Paper Converters Ltd has not set its future vision so that need the refreeze to go the further success.
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1997), the collective thoughts, habits, attitudes, feelings, and patterns of behaviour (Clemente and Greenspan, 1999), and the pattern of arrangement, material or behaviour which has been adopted by a society (corporation, group, or team) as the accepted way of solving problems (Ahmed et al., 1999). Corporate culture can also be looked at as a system with inputs from the environment and outputs such as behaviours, technologies and products. According to Professor Schein (2010)cited in www.abielg.com, occupations have cultures, nations have cultures, and ethnic groups have cultures and with globalization it is not just going to be about organizational culture. For example, in many organizations, the problem between engineering, finance and marketing is much greater than the problem of their overall corporate culture. He further added an example, in medicine, the conflict between the nursing culture and the doctor culture and the administrator culture is much more of an issue than what is the corporate culture of the whole hospital system. He discussed about the subcultures an issue which is the real problem of the organization. In the international organization have not only occupational subcultures but also national cultures. There are many people working who come from different cultural background and they worked different cultural environment and they did different worked practices of the past. So, the manager should be focused on cultural integration to mitigate cultural clash in the post merger integration. Professor Schein (2010)cited in www.abielg.com, described about the notion of Cultural Islands where actually get multicultural units into a talking relationship with each other so that they can begin to explore their common ground. When researcher reviewed this case study he has found that Paper Converters and Zambian company decided to work together as a Joint Venture to increase the share values however, there were more cultural power distance between Zambia and UK so they were not understanding each another culture and then start to clash the culture. Alan and Barry have set up same systems which were successful in the UK but the faild in Zambia because of the cultural lag. They either ignored or did not have ideas about the cultural differences which lead to cause to fail the company. The biggest cause of failure of Paper Converters Ltd is lack of management of integration of cultural units and misunderstanding of the national and international culture. Professor Schein (2010) cited in www.abielg.com, suggested that managers have to create cultural islands to allow that kind of communication to occur. Managers create 8
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settings those cultures will understand each other enough to get united and create a working environment toward the same purpose.
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According to the Paper Converters Ltd case study, the staff from the sales office already knew the administration and the production department staff; but they had never worked particularly closely together. Within one month of all staff being relocated onto one site tensions among the staff were becoming visible. Within three months, both Alan and Barry were receiving complaints from members of their teams about the unreasonable behaviour of the other staff. The directors could see the results of the tension, but could not identify the cause. As a result the tension has continued. Managers in a high performance organization should maintain and strengthen trust relationships with their employees by being honest and trustworthy, treating all equally as a smart and respect them. A real team is a group of individuals who are equally committed to a common purpose for which they hold each other accountable (Regan, 1999), he added a high performance team is one that satisfies all of the requirements of real teams, but take their commitment further, deepening their relationships in which individuals sacrifice deeply for the overall success of each individual on the team as well as the team itself. One of the key success factors of high performance teams is trust building between management and employees. According to Paper Converters Limited case study the researcher has found, they did not motivation to the employees so they were getting so many complaints through the staff. After the merger company should have built a high performance teams to achieve companys goal. Lack of to prepare high performance teams building and motivation can be the cause of failure of the Paper Converters Limited.
and performance management involves teaching employees to focus on critical tasks. Effective talent management ties a lot of separate initiatives together, coordinates and integrates them, and puts them into a common language. The growing interest in talent management is primarily a result of increasing recognition of the impact talent management practices have on business growth and profitability and the role talent management plays for dealing with the shortage of skilled labour in the workforce (Berggren & Lozaga, 2008). The end goal of talent management initiatives is to help get the right people in the right jobs doing the right things to make a business succeed. This goal may sound straightforward, but it is often very difficult to achieve. Why? Because to be successful talent management processes must effectively predict and change the day-to-day behaviour of individual employees. Predicting and influencing human behaviour is difficult (Ackerman & Humphries, 1990; Hunt, 2007). The ability to influence employee behaviour makes talent management a highly effective method for driving business results. Small changes in employee behaviour can have massive impacts on business performance (Hunt, 2007),but the behaviour of employees can be difficult to understand. According to the Paper Converters case study, managers often wonder they are getting complaints from the staff and they did not know why is that employee acting that way? Similarly, the factors that underlie employee behavior are rarely simple. As a result, it is often difficult to determine exactly how well a talent management program is likely to work. For example, a 360 survey feedback process that works well in a company with a historically supportive and open culture might have negative consequences if used in a company with a less trusting, more cynical workforce (Morgeson et al., 2005). Clarifying objectives require clearly defining and communicating the goals employees are expected to achieve in their jobs. One of the most effective ways to maximize workforce productivity is to tell employees exactly what it is you want them to do (Locke & Latham, 2002). One the weakness of paper converters Ltd was not setting the clear objectives and lack of two ways communicating between management and employees. Providing effective feedback is not about telling people what they are doing wrong. It is about giving employees with information that both increases their awareness of what they need to change and increases their confidence in their ability to change. Despite the clear value of dialogue, most organizations struggle to maintain effective communication between managers and employees (Nadler, 1998). According to the principle of talent management, 11
B00629517 Post-Merger Integration and Change Management Report for Paper Converters Limited.
managers should have focused on the following basic principle of talent management to achieve the success of the goal. a. To respect employees b. Clarify Objectives of the company to the employees c. Increase Awareness about the situation to employees d. Create Dialogue between managers and employees e. Strong Trust relationship between managers and employees The reviewed of the Paper Converters Limited case study the researcher have found the clear gap of trust and communication between directors (Alan and Barry) and employees because they were getting feedback their team members which were unreasonable. Alan and Barry were getting complaints from their employees but they did not know what the reason was. They were not clearly informed companys objectives to employees and employees were not aware about the company situation and also nobody motivated them so that that situation was occurring.
Section 6. Recommendations
After a thorough analysis of case study and discourse the past literatures, the following recommendations are hereby made for Paper Converters Limited: 1. In post merger integration cultural issue is playing the more dominant role to sustain and growth the organization. The company should be managed cultural problems following by the Professor Scheins notion of Cultural Islands. 2. Managing change is always a crucial movement of the organizations growth and decline. According to Lewins, change is always painful in changing stage and companys future vision is unknown so it should setup future vision (refreeze). 3. According to Nadler (1998) clear value of dialogue, most organizations struggle to maintain effective communication between managers and employees so company should have effective communication and trust relationship between managers and employees. 4. Effective talent management should be a key solution of the Paper Converters Ltd. According to Handschin (2009), effective talent management ties a lot of separate initiatives together, coordinates and integrates them, and puts them into a common language.
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Section 7. Conclusion
This study emphasized the post merger integration and change management, the importance of effective management in post merger integration the case study analysis of Paper Converters Limited. This case study analysis is based on the merger integration and change management. The researcher identifies the key areas of the post merger integration and change management which are organization change management, creating new corporate culture, high performance teams building and talent management which are discussed with the study. In a post -merger environment, the challenge is always to bring different cultures together to build a consistent new whole. The researcher has identified some problems after the integration process of Paper Converters Limited. Change management focus on the people side of change, effectively aligning the people, processes, and technology elements required to transform current delivery and operations to a new concept. Cultural issues are more dominant issues in post merger. Corporate cultures affect not only their employees attitudes and values but also the bottom line. Corporate cultures to become more powerful drivers of high performance. The collective thoughts, habits, attitudes, feelings, and patterns of behaviour and the pattern of arrangement, material or behaviour which has been adopted by a corporation, group, or team as the accepted way of solving problems. Professor Schein (2010), describes about the notion of Cultural Islands where actually get multicultural units into a talking relationship with each other so that they can begin to explore their common ground and he believed that this notion is very useful to solve to cultural clash in any organization. After integration into high performance team is essential to meet the goal of the organization and support real-time problem solving and are more flexible and responsive to changing demands with greater speed, accuracy, and awareness than individuals. Talent management is about getting the right people in the right jobs doing the right things and its goal to make a business succeed. Most organizations struggle to maintain effective communication between managers and employees and it creates the dilemma in within the departments and staffs. In the post merger integration effective communication and motivation has played the key role to solve the problem of organization.
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Section 8 References
Ackerman, P.L., & Humphreys, L.G. (1990). Individual differences theory in industrial and organizational psychology. In M.D. Dunnette & L.M. Hough (Eds.), Handbook of industrial and organizational psychology (2nd Ed, Vol 1, pp. 223282). Palo Alto, CA: Consulting Psychologists Press. Ahmed, P.K., Loh, A.Y.E. and Zairi, M. (1999), Cultures for continuous improvement and learning, Total Quality Management, Vol. 4 and 5, No. 10, pp. S426-34. Bandura, A. (1986). Social foundations of thought and action: A social cognitive theory. Englewood Cliffs, NJ: Berggren, E., & Lozaga, C. (2007). Drive top and bottom line results with people performance, Success Factors, Inc. Bill Handschin. (2009). The Essence of a Talent Management System. Available: talentmci.com/talent_management_system.pdf. Last accessed 10 December 2012. Brouthers, K., Van Hastenburg, P. and Van Den Ven, J. (1998), If most mergers fail why are they so popular?, Long Range Planning, Vol. 31, pp. 347-53. Bryson, J. (2003), Managing HRM risk in a merger, Employee Relations, Vol. 25 No. 1, pp. 14-30. Burns, M. and Rosen, A. (1997), HR aspects of a takeover: part 1; how to stop the wheels coming off during the test drive, Career Development International, Vol. 2 No. 2, pp. 68-73. Cartwright, S. and Cooper, G. (1995), Organizational marriage: Hard versus soft issues. Personnel Review, Vol. 24 No. 3, pp. 32-42. Charissa P. Kathleen K.. (2011). Organizational Change Management: In a Merger Integration Environment. Available: www.hisoft.com/.../OCM%20-%20Merger %20Integration_email.pdf. Last accessed 02 Dec 2012. Chatterjee, S., Lubatkin, M., Schweiger, D. and Weber, Y. (1992), Cultural differences and shareholder value in related mergers: linking equity and human capital. Strategic Management Journal, Vol. 13, pp. 319-34. Chen, G., & Klimoski, R.J. (2003). The impact of expectations on newcomer performance in teams as mediated by work characteristics, social exchanges, and empowerment. Academy of Management Journal. 46(5), 591-607. 14
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Clemente, M.N. and Greenspan, D.S. (1999), Culture clashes, Executive Excellence. Vol. 16 No. 10, p. 12. Ed Schein. (2010). Ed Schein talks about cultural islands in organizations and how they need to be aligned for better understanding. Available: http://www.abielg.com/scheinhub/?p=44. Last accessed 02 Dec 2012. Fisher, J. R. Jr. (1999) Merging Cultures, Executive Excellence 16: 12. Gerds, J., & Strottmann, F. (2010). Post Merger Integration: Hard data hard truths. Deloitte Review (6). Greenberg, J. and Baron, R.A. (1997), Behaviour in Organizations, Prentice-Hall, Upper Saddle River, NJ. Griffith, V. (2000), The people factor in post merger integration. Strategy & Business, Vol. 20 No.3, pp. 83-90. Hunt, S.T. (2007). Hiring success: the art and science of staffing assessment and employee selection. San Francisco, CA: Pfeiffer Joana R.C. Kuntz, Jorge F.S. Gomes, (2012),"Transformational change in organizations: a self-regulation approach", Journal of Organizational Change Management, Vol. 25 Iss: 1 pp. 143 162. Available: http://dx.doi.org/10.1108/09534811211199637. Last accessed 02 Dec 2012. Kurt Lewin. (1940s). Lewin's Change Management Model. Available: http://www.mindtools.com/pages/article/newPPM_94.htm. Last accessed 2 December 2012. McShane, S., & Travaglione, T. (2007). Organisational behaviour on the pacific rim (2nd ed.). North Ryde, Australia: McGraw-Hill Australia. Morgeson, F.P., Mumford, T.V., & Campion, M.A. (2005). Coming Full Circle: Using Research and Practice to Address 27 Questions about 360-Degree Feedback Programs. Consulting Psychology Journal: Practice and Research, 57, 196209. Nadler, (1998). Champions of change. San Francisco, CA: Jossey-Bass. Pablo, A., Sitkin, S. and Jemison, D. (1996), Acquisition decision making processes: the central role of risk, Journal of Management, Vol. 22 No. 5, pp. 723-46. Pinto, J.K., (2007). Project management: Achieving competitive advantage. Upper Saddle River, NJ: Pearson Education. Popular?, Long Range Planning, Vol. 31, pp. 347-53.Prentice Hall. R. Jones, J. M. George (2011). Contemporary Management. 7th ed. New York: McGraw-Hill /Irwn. p376-78.
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Regan, M. D. (1999). The journey to teams: A practical step-by-step implementation plan. New York, Holden Press. S. R. Clegg, C. Hardy and W. R. Nord. London, Sage Publications. Schuler, R. and Jackson, S. (2001), HR Issues and activities in mergers and acquisitions. European Management Journal, Vol. 19 No. 3, pp. 239-53. Shulman, A. D. (1996). Putting group information technology in its place: communication and good work group performance (pp. 257-361). Handbook of organization studies.
Appendix 1
Figure 1. Three Step of Change Management
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