Change and Culture, Essay Example

Background

In the inception of a new merger organization, middle management will be responsible for easing the transition. Formerly, the company due to merge to the main organization was considered a competitor, leading mudslinging campaigns to exist toward both companies. Despite the previous animosity, the companies have agreed to coexist and mutually benefit one another.

One of the chief advantages of the acquired company is its implementation of preexisting inpatient and outpatient services. Formerly, the original company did not offer any of these services. With the new merger, the creation of jobs and the broader range of services proffered by the dual company will create exponential growth.

Mergers

There are many challenges faced by a newly merged company. In the socioeconomic environment of today, new mergers and other financial amalgamations of two or more corporations face incredible difficulties in the new management. There are a number of reasons for this – most notably, the former existence of tough competition between the two companies. Rival companies often have loyal employees, who find it difficult to set aside former hostilities in order to work together. But through the implementation of careful management practices and a solid business plan for the future, there is a good foundation on which to build the new merged company – bigger and better than either company was ever before, on its own.

Example Rubbermaid and Newell Merger

In 1999, the two corporations of Rubbermaid and Newell merged together (Reh, 2010). Five years passed with the new merger just settling into new acquisitions, management, capital and overall performance under leadership from bother companies’ chief executive officers (CEOs). By the time five years had passed seventy-five per cent. of the top hundred executive officers had turned over (Reh, 2010). This instability did not bode well for the newly merged company; employees from temp agencies actually would last longer than the leadership of some managers.

Many of these executives quit, unwilling to work together with former competitors.  Some were fired for poor managerial decisions – made without the best interest of the company as its core intent. The first year after a merge is the most critical to the new business. To accommodate the accompanying demand seen from consumers at the inception of a new company, the merger must make a series of promises to them.

First and foremost, a solidified leadership panel must be created to gain consumer confidence in the organization of the newly merged business. This can be accomplished by listing new and more prominent members of the merger. By offering customers and investors an opportunity to meet and get to know the most important names in the new company, confidence can build trust between corporate executives and the stockholders and other participants. Promises of greater efficiencies, synergies, and production means must be kept to ensure the trust.

Another factor to consider is the use of retention bonuses. This ensures the continued employment of some of the old employees that made the separate companies before the merge excellent. Retention bonuses also ensure the continual employment of leaders who may seek other employment opportunities after the big merge.

Many studies have shown that mergers have an enormous predilection toward failure –especially in that first year. This is typically due to poor management after the merge and the delays seen between the merge and the anticipated benefits from that merge. Often, the costs inherent in any large merger are underestimated and thus overwhelm the fledgling merger at first.

Identifying budget cuts and other financial decisions can be especially difficult under the newly merged company. Integration teams should be formed in every major subdivision within the new company. Leaders from each subdivision can come from both companies to ensure ideas are heard from both sides. This is just one way that accountability can be divided amongst individuals from both companies.

One example that stands out in the business world of being an overwhelmingly successful merger is John Chambers of Cisco. In order to maintain such widely acclaimed respect for developing a successful merging business model, the Chambers’ formula was developed. It consisted of the explicit declaration from both former companies as to what the shared vision of joining forces was.  Chambers’ formula also involved the retention of the best executives from both companies and the exploitation of their individual prowess.

John Chambers also identified the necessity of long-term visions for the acquired employees, who often were the most disheartened amongst the new merger. In order to combat the malaise and boost morale, Chambers insisted that there be a reward system for cooperation of individuals and marked achievement of any one in any particular field.

John Chambers also noted the importance of permanent post-merger teams designed for the sole purpose of integrating ideas amongst members from both former companies. The continuous reinforcement of the role of integration is critical.  Just as important as the acts decided upon by these integrative groups is the swiftness by which these acts were carried out. All of the procedures involved effective communication amongst parties of both former companies.

Overall, the responsibility lies in the project management expert whose job is to keep the new merger on track. It cannot be overstated that there is a need for constant reinforcement of objectives and an overall statement of purpose in the pursuit of any goal. Because a huge number of merger companies fail, it is of critical importance that the models set forth by mergers that have succeeded.

References

Liebler, J. G. & McConnell C. R. (2008). Management Principles for Health Professionals Sudbury, MA: Jones and Bartlett

Reh, J. F. (2010). Managing Mergers Successfully. retrieved on October 30, 2010 from http://management.about.com/cs/mergersma/a/MergerSuccess.htm

Smith, M. K. (2001). Peter Senge and the Learning Organization. Retrieved October 30, 2010 from InFed.org: http://www.infed.org/thinkers/senge.htm.